Government will soon open the doors for us to enter the world of opportunities typically available only to the 1%.
Since the advent of the internet we have seen the leveling of the playing field for the average investor with the rise of online trading of the stock market. Well, now the a new opportunity will be available for the average investors to join in the opportunities of the 1%.
Up until later this year, the only people that had access to startup companies at their early stages have been rich people aka “accredited investors”. This is because the government specifically restricted access to these startups to only people earning more than $200k and with $1 million in the bank. This allows a whole PRIVATE stock market to exists and were not invited. It’s better known as private equity in case you’re curious. Companies pretty much fly under the radar of most regulations. Look it up, google
Rule 505 of Regulation D.
Now, I don’t know about you but I don’t make that much money and I don’t have a million in the bank. BUT… dang I wish I had access to invest my piggy bank money into these tech companies popping up making everyone rich.
Last year, October, 2015, the Securities and Exchange Commission (they regulate Wall Street, although they suck at it but that’s another article) voted in favor of Title III Of The JOBS Act which gives “non-accredited” investors (that’s us) the ability to buy into (invest) in startup companies that before were only available to Wall Street investors. First time in 80 yrs this opportunity is now available to the average investor.
Ok? Jaime, we already have the stock market, why not just invest in that?
Well you see investing in the stock market is like arriving at a party when all the food and alcohol is almost gone. Meaning, Yeah you’ll get your 8–10% return and that is good for those that don’t want to risk it, or are older and ready for retirement. But for those of us that want in on creating REAL wealth and gain higher returns, this is one opportunity.
Imagine how much Facebook owners made when they went from a basement company to their IPO. The meat of the profits is made before the company goes public.
You see, before a company even goes public (traded in the stock market), they need to raise money from investors which are usually banks, hedge funds, and “accredited investors” aka rich people. Think of it like a crowdfunding where only rich people can participate in it and they get to OWN a piece of the company. Unlike OUR crowdfunding sites like kickstarted, and gofundme, EQUITY crowdfunding actually makes you an owner in whatever company you put money into.
It usually follows like this…
You want to get in into the first two stages, before the company goes public.
What’s next… I believe we will start seeing online brokerage firms (middle man companies) offering access to this startup companies soon. The filing paperwork to register these type of brokerages has already started. In Europe they are already in existence, companies like Seedr.
Although it’s a very small market and not applicable to most people, I can see why this isn’t making headline news. I don’t expect most of my Facebook friends to read this article but for those interested in finance beyond your 401k this is something worth looking into.
Thanks for reading.