Things like the AngelList are nothing more than markets finding ways around arcane and reactionary laws like Sarbanes-Oxely and Dodd-Frank. You can group Second Market and SharePost into that same category. You wonder why start-ups and small business turn to the modern day equivalent of loans sharks, angel investors. Thank your friendly SEC for forcing compliance cost through the roof. Thank the SEC for blocking access to these very secondary markets from the little guy for his own good. Thank the SEC for pushing start ups, large and small, into the hands of VC’s and angel investors that usually don’t have the sustainability of the enterprise in mind when they invest.
That rant was not the typical Anti-regulatory rant your use to from me. The SEC (and the other alphabet soup of securities regulating agencies) do serve some purpose. I have yet to see what in light of the Enron and Worldcom debacles of the 90’s and the Madoff /Standford schemes of the past couple of years. Sarbanes-Oxely and Dodd-Frank are only going to penelize those who comply while the real crooks create the next financial crisis. Remember, Sarbanes-Oxely was a result of Enron and Worldcom scandals. A whole lot of good that did us when Wall Street sold us down the river 8 year later.
So all this hoopla surrounding AngelList’s, Second Market, SharePost , Twitter and Facebook valuation is really missing the point. The issue here is how we got to the point where these secondary markets became necessary to the start up ecosystem. Ever wonder why Twitter and Facebook haven’t IPO’ed? Could it have been the onerous mandates of Sarbanes-Oxely? Or the overwhelming amount of meddling a founder would have to contend with being publicly traded? There are less protections for a public company from the masses then are bestowed on the public from the SEC on high. Hell, I wouldn’t go public in this country if I had a choice. This sucks for start ups who could easily go to the public markets to raise funds. Instead they are forced to take there chances with VC, Angels and private equity vultures. Wonder why we are killing our capital markets and along with it our competitiveness? Silly ass securities laws.