Matt Levine on accredited investors: https://www.bloomberg.com/view/articles/2018-09-24/earning-the-right-to-get-swindled … My rough feeling on this:
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People who are (by the standards of projects requiring lots of growth capital) poor and unsophisticated are bad investors to have. They have an annoying tendency to ask questions like "Will I get my money back?" and "So how are things going?"
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Rich, sophisticated investors ask these questions too, but they tend to ask them less frequently, less in absolute aggregate (because you'll need less investors), and, crucially, in the class-inflected ways that being rich and sophisticated suggests you should communicate.
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This means that high-potential companies which need lots of growth capital are going to continue getting it from salesmen who bundle up their needs then pre-resell them to limited partners.
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Most companies who dip their toes in e.g. "Raise $1k from 10k regular folks" will be adverse selection problems; $10 million was not on offering from the folks who putatively know what they're doing. (The con case to this is "Ahh but 10k committed evangelists in consumer.")
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I know a lot of folks who are in the orbit of Silicon Valley who are not, technically speaking, accredited investors, but who would like to be accredited investors, partly for cachet, partly for social reasons, and partly because there are genuine opportunities available.
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Here's the general way this plays out, assuming all parties are "in the know": "What's your salary?" "Healthy but nowhere near the bar." "What's your net worth?" "Barely a positive number." "Really. You own virtually nothing." "I have virtually nothing in checking."
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"What company in Silicon Valley is worth what it has in checking?" "... Oh." And after that it's a quick exercise in accountancy. (Run it by your own lawyer or accountant; reporting not endorsing, etc.)
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End of conversation
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