S.E.C. Gives Small Investors Access to Equity Crowdfunding

Re:S.E.C. Gives Small Investors Access to Equity Crowdfunding by tptacek on Saturday October 31, 2015 @06:19AM (#10482287)

You can't simply diversify. You have to pick a specific kind of company. If you invest in 10 startups that all have an equal shot at 2x'ing --- a fabulous success for a stock market pick! --- you will lose money, because the failure rate of companies with no operating history swamps a 2x return, and the winners can't adequately subsidize the losers.

If it was just a matter of making sure people diversified, I'd agree with you.

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Re:S.E.C. Gives Small Investors Access to Equity Crowdfunding by datashovel on Saturday October 31, 2015 @09:11AM (#10482538)

I think I see where the disconnect is from my end here. I guess I was thinking that this will have broader reach than just startups.

If a business has been around for 10 years and they're running into a tough patch, I think it could be reasonable to think one of their options would be to offer equity in their business in exchange for money.

Investing in that type of business I think won't necessarily produce the same percentage of "failed investments" so much as it will simply provide a lot more options that will earn the investor less than 2x. Long term prospects, perhaps 2x or even 3x returns may happen, but I doubt anyone will be doing this thinking they're going to find a 1000x return.

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