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.

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triceratops a day ago | parent | next [-]

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.

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tptacek a day ago | parent [-]

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

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colesantiago a day ago | parent [-]

"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.

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tptacek 21 hours ago | parent [-]

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.

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colesantiago 21 hours ago | parent [-]

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.

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tptacek 21 hours ago | parent [-]

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.

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colesantiago 17 hours ago | parent [-]

I love this projection you're providing to me, how much money did you lose on these companies?

I am in and have invested in YC startups, because I know which ones have growth potential and upside.

> 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)

I didn't say they had to be a public company, you can invest in Stripe via the secondary market (which I have done before with other companies) but even then this is for accredited investors.

There are lots of unprofitable public companies on the stock market that also return $0 to investors and have no dividends.

But this trend of many private companies choosing to stay private obviously isn't going to help those except the very rich and accredited investors.

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tptacek 16 hours ago | parent [-]

I'm a principal at Fly.io (W20). I'm familiar with the dynamic.

I don't invest in tech companies.

Most funded tech companies don't return funds to investors. Noncontroversial claim.

Investors invest in tech companies as a/in a portfolio strategy. They don't expect any one investment to succeed, and they allocate to the asset class in part to get exposure to decorrelated assets.

That's not at all what retail investors are doing.

You keep talking about accreditation. The companies you want to invest in don't want your money and they don't care that you're accredited.

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colesantiago 10 hours ago | parent [-]

> You keep talking about accreditation. The companies you want to invest in don't want your money and they don't care that you're accredited.

You don't know that 100% and unfortunately for you the YC companies accepted my money and I now hold stock in these companies.

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tptacek 10 hours ago | parent [-]

Congratulations?

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colesantiago 9 hours ago | parent [-]

So why are you projecting "The companies you want to invest in don't want your money." when this is obviously not true at all.

I don't know which companies you tried to invest in (tech or not) but I am assuming most of them rejected you given your constant projecting towards me.

I don't want smart people/investors who saw the future early (most that are retail and some are academics who actually build this tech) who want to get exposure to the growth companies making an impact to use extremely risky and shady financial vehicles like Multi-Layer SPVs and tokenized private stocks just to get some exposure.

When all in all it isn't the real thing and they get rugged anyway.

As long as people like you are in favor in excluding these people who just to buy a private company stock on secondary markets, then the gatekeeping will continue.

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tptacek 9 hours ago | parent [-]

I don't even understand what this thread is about anymore. The claim of mine that you're trying to rebut is "dealflow is a thing". If you want to argue that it isn't, be my guest, but I'm not going to sign up to hash it out with you.

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colesantiago 9 hours ago | parent [-]

ok?

I and may other angel investors are proof you're obviously wrong so...

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tptacek 9 hours ago | parent [-]

Because you managed to get a couple of YC companies to take your money?

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colesantiago 9 hours ago | parent [-]

You said "The companies you want to invest in don't want your money."

Your words, you should own them.

I only want more smart people I know to have the chance to be angel investors in these companies and to be able to access secondary markets to buy and sell these shares.

What's wrong with that?

	▲	tptacek 9 hours ago \| parent [-]
		The companies we're talking about here, like Stripe. Broadly speaking, promising companies do not want random strangers on their cap tables. They barely want random venture capitalists on their cap tables. I'm glad you have friends at other startups that want to work with you. That's not something you're going to be able to say about a random person.

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jonas21 a day ago | parent | prev | next [-]

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.

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colesantiago a day ago | parent [-]

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.

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tptacek 21 hours ago | parent | next [-]

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

	▲	shimman 19 hours ago \| parent [-]
		Maybe we should, seeing how disastrous unregulated tech has been for society.

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fragmede 18 hours ago | parent | prev [-]

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.

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paxys a day ago | parent | prev [-]

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.

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colesantiago a day ago | parent [-]

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

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tptacek 21 hours ago | parent | next [-]

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%.

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skinnymuch 20 hours ago | parent [-]

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.

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tptacek 19 hours ago | parent [-]

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!

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colesantiago 18 hours ago | parent [-]

Why do you think that is?

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tptacek 18 hours ago | parent [-]

Because they watched a small group of people win a roulette straight bet when the ball landed on 32 and now think federal action is needed to allow everybody to bet straight 32 on everything.

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colesantiago 18 hours ago | parent [-]

There is no other way for that group of retail investors to build wealth other than go into these highly and extremely risky assets that you and I hate and do not recommend. (even more risky than secondary markets)

Sure, they can invest in public companies but if lots of these high growth companies stay private, the gains will not be shared towards retail especially for their pensions.

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tptacek 16 hours ago | parent [-]

This is obviously not true. Most wealthy people do not build their wealth by gambling on meme stocks and tech companies. That's an extraordinarily Twitter-blinkered thing to believe.

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colesantiago 9 hours ago | parent [-]

> This is obviously not true. Most wealthy people do not build their wealth by gambling on meme stocks and tech companies. That's an extraordinarily Twitter-blinkered thing to believe.

I never said wealthy, I said "retail investors", and most retail investors are not wealthy. Maybe you've been reading off Twitter and got that mixed up.

Your words not mine, but I'll just say the wealthy have more options than retail.

Shame, because I know some smart people who want to invest in the same companies as me and cannot and have to wait until it goes public for a that chance (if that ever comes)

Now with most growth companies staying private these people won't get a stake in the future and obviously you're fine with that.

I wonder if you would think it would be fine (if not great) if Google, Apple and other companies would just stay private in another universe.

	▲	tptacek 9 hours ago \| parent [-]
		You said "there is no other way for that group of retail investors to build wealth other than go into these highly and extremely risky assets". Obviously, no, that's not true.

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paxys 21 hours ago | parent | prev [-]

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.