[colesantiago]

Private markets is where the wealth is (if you invested at the bottom), as soon as Stripe goes public you're getting dumped on.

Unfortunately you need to be an accredited investor to access these markets.

This is the real gatekeeping here as rich pop stars, actors, sports stars and musicians who aren't versed in tech has more access to investing in these private companies than the academics, students in europe creating the algorithms that power them.

An 11 year old can inherit $100 million and be more "accredited" than you, even though they (may) have no knowledge of the industry, no investing experience and no years of industry experience.

Even if you have knowledge in the tech scene and you know which companies are going to go big in the future, unless you're ultra rich already to qualify as accredited, you're shut out early on.

[triceratops]

Something like 20% of American households meet the accredited standard. It isn't some ultra-elite bar.

Stripe being able to find all the capital they need in private markets is the actual indicator of wealth disparity.

[tptacek]

Not to mention: Stripe doesn't want your money, whether or not you're accredited.

[colesantiago]

"Private markets is where the wealth is (if you invested at the bottom)"

Stripe might not need your money now, but they certainly needed it at the pre-seed, seed stage where if you were an angel/seed investor you would have been able to participate.

[tptacek]

No they didn't. They were picky at the seed stage. They were picky in their first priced round. They were picky in every subsequent round. There was never a point where they wanted your money. The most promising companies fight off investors when word gets around they're raising.

There is never a point in the lifecycle of any of these companies where they wanted random retail investors with no network on their cap tables. The kinds of companies that do want those investors tend, for clear reasons, not to be the kind you want to invest in.

You don't want accreditation rules relaxed or eliminated. You simply want Stripe to be a public company instead of a private one. Fair enough, but Stripe doesn't want to be a public company.

[colesantiago]

Even worse. This means that no wealth will be created for people who actually want to invest.

With Stripe's non IPO example, many will follow and will stay private.

So more gatekeeping.

[tptacek]

Again: you can make a coherent case that companies should be required to be public at a much earlier stage (I don't think it's going to happen, but you do you). It has nothing at all to do with accreditation though. You're pining for access to companies that wouldn't take your money even if you were a well-known institutional investor. They get to pick which VC/PE firms they work with, and they know it, and it is their job to pick the ones that best serve the interests of their firms.

I mean this respectfully, but: you do not sound, in this thread, like someone whose registration on Stripe's cap tables would be a service to Stripe. To society? Maybe? Who knows. But that's not how Stripe makes decisions.

I also think you drastically overestimate how much broad wealth creation would follow from letting retail investors into private tech companies. You're debating entirely based on a survivor artifact and ignoring the fact that most tech companies --- even most of the highly-capitalized ones --- return $0 to investors.

[paxys]

You need an annual income of $200K to become an accredited investor. If you don't have that, you anyways shouldn't be participating in risky private markets.

If anything they should also restrict options trading, sports gambling, prediction markets etc. to accredited investors.

[colesantiago]

Why don't we extend this to the risky public manipulated stock market?

[tptacek]

Because the odds of you losing all your money on private tech company shares are nearly 100%, and the odds of you losing all your money in SPDR or VFINX are nearly 0%.

[skinnymuch]

Still seems silly when meme stocks exist and the establishment (like entire media and news apparatus) can and do collude to mess with things (like “Black Monday” ~2021 when all the media and news lied and said wall street bets and meme stonk people had moved on to silver) and within days all the meme stock gains across over a dozen companies were entirely wiped out.

Not saying meme stocks should be a thing but no one gets investigated or in trouble. Nothing is done. If they cared about the average person something would be done.

[tptacek]

When people investigate meme stocks the people complaining that they can't get on Stripe's cap table take the side of the meme stocks!

[colesantiago]

Why do you think that is?

[paxys]

Because that is what the SEC was created for, and (in theory) it is their job to protect regular invesors from market risks. Now how effectively that works is a different conversation, but at the very least you have reporting requirements, earnings releases, material disclosures, insider trading laws, SIPC insurance, circuit breakers etc. It is very unlikely that you are going to lose all your money in a stable blue chip company or broad index fund, but a regular joe trying to invest in a hot "private investing opportunity" is absolutely going to be taken for a ride.

[jonas21]

If you don't meet the financial requirement ($200K annual income or $1M net worth), you can also qualify as an accredited investor by passing the Series 65 exam and filing a form with the SEC.

So you have to prove that either you can afford to lose some money or you have enough investing knowledge to know what you're getting into. Seems fair.

[colesantiago]

So someone who inherits $100 million (11 year old or not) doesn't have take the exam, but someone who knows about the industry inside out has take an exam to participate?

Seems "fair" to be honest.

I have a few friends that that have told me about certain companies they would like to invest in and they are knowledgeable about but they cannot access them but I can and not give them any shares.

[fragmede]

If you'd like to petition the SEC to make it so that you also have to be, say, 25 to be accredited so as to remove that particular loophole and make it even harder to become a accredited so 11 year olds don't get accredited because of a rather specific scenario, send me the change.org petition. I don't think 11 year olds should be accredited. Might make me elitist, but I've been called worse things.

Still, the theory is that having $100 million, even as an 11 year old, means you have about $90 million more than most people to lose before it even becomes an issue. Hence "accreditation". Accreditation isn't about "can you make smart investments" but about "will you be broke and destitute soon", and having $100 million makes it harder than I'd $400k is your life's savings, and you're about to put it all into NFTs.

Is the theory, anyway.

[tptacek]

We don't care if people with $100MM make a bad bet on a tech company.

[shimman]

Maybe we should, seeing how disastrous unregulated tech has been for society.