[hal9000xp]

In the eyes of SEC, ICOs are nothing more than equity crowdfunding. It means that SEC doesn't like any sale of unlisted assets to unaccredited investors.

By SEC definition accredited investor is an investor who has either $1M of liquid net worth or stable income not less than $200k per year.

Original intent of the government was to bar unsophisticated investors from high risk investments.

While I understand logic of the law - many people are completely financially irresponsible and are not capable of critical thinking (that's what politically correct term "unsophisticated investor" actually means), I find this law extremely frustrating.

For example, I had no chance to buy Spotify when it was well under $1B valuation because the government baby-sitting me by excluding me from opportunity to invest into early-stage startups.

If you want to downvote me on "not capable of critical thinking" and at the same time support barring people from making their own financial decisions, please think twice because it's clear contradiction.

There is a compromise: Why not lower entry level of becoming accredited investor? For example, you could be semi-accredited investor with lower capital but with limits on investments. Or making some government exams on risk taking and investing? Or having special government-approved platform for early-stage investments for unaccredited investors. There are lots of combinations.

Right now, there is a huge hunger among people for early-stage investments. And if you are not making it legal, it just go underground and as a result with more dangers for unsophisticated investors.

[harryh]

Even without the SEC, you would not have been able to invest in Spotify. They had zero interest in taking your money when they could raise money much more easily from professional investors capable of writing 8 figure checks.

It's very important to understand this and the adverse selection problem that would emerge if laws were changed. There's a reason that only scammers did ICOs.

[hal9000xp]

> only scammers did ICOs

This is absolutely incorrect. One of many examples - Tezos.

[harryh]

Oh, I probably overstated a little bit. But I'm confident that 90%+ of them were scams.

Re: Tezos - "Inside the Crypto World's Biggest Scandal"

https://www.wired.com/story/tezos-blockchain-love-story-horr...

[gamblor956]

As an individual, the only chance you'd have to invest in a hot startup is to be an angel investor, or else close family or really good friends with the founders or VCs. Even accredited investors with 10s of millions got turned away from hot startups like Spotify and Snapchat (back when it was the big kahuna).

And let's be clear: you can still invest in a startup as a non-accredited investor. There is no prohibition on that, or else startups couldn't give equity to employees, contractors, or others (see, e.g., pre-IPO Facebook and Google, and the many famous stories of dotcom millionaires from their respective IPOs).

[hal9000xp]

A year ago, I watched YC lecture for raising capital where Sam Altman or somebody else recommended startup founders NOT raise any capital from unaccredited investors because it may create problems with raising next rounds. In other words, current regulatory environment also promotes discrimination of unaccredited investors.

Employee compensation is different.

P.S. It's amazing how much Hacker News readers are against cryptocurrency, in favor of very big government, very high taxes up to 70% as their Piketty, Krugman suggest to enforce equality of outcome. This community became total opposition of what Paul Graham might thought back in 2007. The only thing is left is to change Hacker News icon to Che Guevara emblem.

[wmf]

Realistically, I don't think intelligent people with no connections can buy into startups or pre-ICOs (the ICO itself is now a scam) anyway. These investments are all arranged privately.