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AlexeySokolinSecondPaper 6 - 24 Jan 2012 - Main.AlexeySokolin
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| | | understanding of dinosaur neuroanatomy. It's the stuff in between
you're not seeing quite as clearly. | |
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> | That's an interesting jumping off point. Any concrete examples of this type of finance prior to capitalism that I could look into? I agree with you on the contribution piece. People contribute to projects because they are cool, not to make money. This is somewhat true for some early stage angels as well (even if they do make money, that's not the most important goal). And I always have been partial to dinosaurs. | | | AngelList is a social network for angels—individuals that themselves had a lucrative career, are likely accredited investors, and qualify for the Regulation D exemption. Driven primarily by reputation and references, this network quickly accelerates traditional fundraising timelines. Instead of going door-to-door with a presentation, entrepreneurs can take advantage of network effects and access a large number of people simultaneously. This is convenient. As an entrepreneur, you want to put your materials in front of every single person that could potentially invest, which would run afoul of the rule against promotion of securities. AngelList? deals with this by facilitating personal introductions and warning against solicitation. Warned or not, the entrepreneur is one click away from tweeting an investment update to thousands of strangers. A competitor site, Gust, serves a similar function for investor networks. Stronger restrictions on mass communication make it less convenient to spam your investment materials to venture firms, but not less feasible.
Another innovation in marketing private equity is represented by secondary market exchanges. After an initial public offering, public stock is traded on secondary markets like NYSE and NASDAQ. As stressed before, financial regulation mandates compliance using accounting and disclosure standards so that risks about the security are known. When those securities are private, compliance is far less rigorous; the stock must not be widely traded and is restricted to institutional and accredited investors. However, recent years have seen low IPO activity and high demand for private company stock (e.g., Facebook). Companies like Second Market and Share Post built online exchanges for restricted share, creating prices and convenient trading platforms. Although members are limited to legally appropriate categories, the line is being blurred and the SEC had launched investigations into trading members. | | | situation at the other end of the process might be helpful.
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> | Given the mess of the first essay where the frame was wider, I went for a narrower exercise which was still relevant to my interests. I think envisioning the financial institutions of tomorrow is very compelling, but perhaps in another paper. |
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