Techdirt. Stories filed under "investing" Easily digestible tech news... http://www.techdirt.com/ en-us Techdirt. Stories filed under "investing"http://www.techdirt.com/images/td-88x31.gifhttp://www.techdirt.com/ Thu, 25 Mar 2010 15:08:00 PDT Why Does Financial Reform Punish Startup Companies And Angel Investors? Mike Masnick http://www.techdirt.com/blog/entrepreneurs/articles/20100325/0409208714.shtml http://www.techdirt.com/blog/entrepreneurs/articles/20100325/0409208714.shtml seriously harm the ability of startups to raise angel financing. Startups raising angel money are about as far from what caused the financial crisis as anything I can think of, and yet, the financial reform bill contains some ridiculous provisions:
Under existing law, startup companies can raise money easily and quickly from "accredited investors" -- individuals with substantial wealth or income. There is no need for the companies or the investors to gain approval from any state or regulatory official.

All of this would change if Section 926 of the Dodd bill is included in any final reform legislation. That section would require, for the first time, companies seeking angel investment to make a filing with the Securities and Exchange Commission, which would have 120 days to review it. This would both raise the cost of seeking angels and delay the ability of companies to benefit from their funding.

The negative impact of the SEC filing requirement would be aggravated by the proposed doubling of the net worth or income thresholds required for investors to be "accredited."
As someone who has raised a fair bit of money from accredited angels in the past, this proposal would be quite troubling. The idea that a company would need to wait four months before it can get the money it needs would kill a lot of startups. There is no evidence that the angel funding process has been problematic in any way. In fact, some might argue that it's one part of the financial system that works incredibly well. So why are politicians mucking with it?

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]]> not-good-at-all http://www.techdirt.com/comment_rss.php?sid=20100325/0409208714 Wed, 3 Jun 2009 17:28:00 PDT New Bubble? Investing In Lawsuits Mike Masnick http://www.techdirt.com/articles/20090603/1314035115.shtml http://www.techdirt.com/articles/20090603/1314035115.shtml some investors are dumping their money into lawsuits, with the idea of taking a piece of the profits. The article notes that a growing number of investors are doing this and that some see it as a "good investment during a recession" -- especially as various class action lawsuits have been springing up by people upset with the financial collapse and looking for parties to blame. Can you imagine investors who funded the real estate bubble now investing in the lawsuits over who's to blame for that bubble?

Of course, in many ways, many of the patent lawsuits by "non-practicing entities" (or as many prefer, "patent trolls") are exactly this as well. NTP, the company that stung RIM for $612.6 million over patents that the US PTO said were invalid was really just a bunch of investors, who all got to share in the "winnings," some of which they're now investing in more patent lawsuits. While the theory may be good, the problem is that it encourages bad lawsuits. One would hope that such investments wouldn't encourage such bad lawsuits because investors would rather invest in lawsuits that have a strong foundation, but that isn't always what we see. Since so much of these sorts of lawsuits (and certainly various class action lawsuits) feel like something of a crap shoot, what you end up getting is a case where these "investors" are better off "diversifying" across a bunch of questionable lawsuits, in the hopes that a few hit homeruns and pay off big time.

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]]> how-very-american http://www.techdirt.com/comment_rss.php?sid=20090603/1314035115 Wed, 6 May 2009 03:33:20 PDT Will Tech IPOs Come Back Soon? Mike Masnick http://www.techdirt.com/articles/20090505/0236294751.shtml http://www.techdirt.com/articles/20090505/0236294751.shtml why he believes the IPO market is about to come back. It's a worthwhile read if you're interested in the startup ecosystem. While I tend to agree with Fred on many different things, on this one I'm not at all convinced. I do agree that there are a growing number of companies who in the past would have gone public about now, but are held back by the near total lack of willingness to risk running the IPO gauntlet. The one thing that we agree on is that investors are going to start looking to put money into new investments sometime soon (there's way too much money being flooded into the market, and it needs to go somewhere). I'm just not convinced it will go into the traditional IPO market. I think it would be good if the IPO market opened up somewhat, but a flood wouldn't be good. It would create another bubble scenario. My guess (at this point) is that the money will go into something unexpected -- perhaps even new financial instruments. However, I'm curious: where do people think all the money that's being dumped into the economy will flow? What's the next bubble going to be?

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]]> theories... http://www.techdirt.com/comment_rss.php?sid=20090505/0236294751 Tue, 25 Sep 2007 05:08:00 PDT Hedge Funds Betting On Patent Lawsuits With Courtroom Spies Mike Masnick http://www.techdirt.com/articles/20070919/030343.shtml http://www.techdirt.com/articles/20070919/030343.shtml sending spies into the court rooms of prominent patent troll cases (via Paul Kedrosky). Apparently there have been several cases where as soon as the verdict is read, a bunch of folks run out of the courtroom (you're not allowed to use mobile phones in the court room). They're not reporters, but patent litigators hired by the hedge funds to report back in within seconds of the verdict coming down. That gives the hedge funds enough time to make their trades before the reporters write their stories and the news hits the wires. We've talked about investors betting on patent trolls before, but this takes the practice to a new level.

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