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Comment by JumpCrisscross | Hacker News Reader

There used to be a time when anyone could sell shares in any company. That didn't work out and so we got the Securities and Exchange Act of 1933. Crowd-funding isn't fatally flawed, but it needs a lot more time to integrate the last 400 years of capital market development history.

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Limiting an individual's investment to a maximum of $1000 goes a long way to making sure Grandma doesn't lose her life's savings. As does the requirement for companies to use an Internet intermediary that performs background checks, verifies identity, holds funds in escrow, etc. The world is different from the 1930's.

What's the difference between being able to invest $1000 and $0? That's not helpful to anybody. If I want to invest $30,000, I have to go find 30 startups? That doesn't make any sense.

If you are an accredited investor (i.e., make over $200,000), current law allows you to invest any amount you like. If you are not an accredited investor, you likely can't afford to invest $30,000... so the thinking goes in Congress.

You still can. My company, for instance, has but two investors holding all company stock. My wife and me. If we wished, we could sell a portion of our company to others even though it is not publicly traded. Privately held companies like ours can still sell portions of their company to other investors, or even take investment capital without selling private stock.

You can even sell to (up to 35) non-accredited investors, as long as you in good faith believe that they are "sophisticated" and understand the investment, and you provide them with some additional required financial disclosures. Afaict, most startups avoid that though, mostly because of worries that having non-accredited investors might complicate future financing rounds.

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