Forums: Discussions for entrepreneurs and small business.

Here`s the thing - the idea is noble, no doubt about that. Empowering the people, democritizing the process of cap formation etc. But - and this is a big one - please don`t be offended, this is meant in the best way - you have not done any of the necessary research. And your idea, while certainly noble - is based on something of a false premise. That false premise has been widely perpetrated unknowingly by the us media (which doesn`t understand the financial regs either). The premise is this (and by the way this is an annalogous situatiion, but you`ll understand what I mean in a moment). Remember the day trading movement that happened in the US in the late 1990s? Firms advertised on TV that for the first time in history, you could buy and sell stock on the exchanges electronically, and compete directly with the market makers on the Nasdaq. Millions of folks went into day trading and some of them made significant money. But - and here is the salient issue: no individual was EVER empowered to tradedirectly on the exchanges, despite appearances and commentary to the contrary. Every day trader used software offered by a brokerage house to trade. This software contains gazillions of devices to keep trades done on it compliant. However, as an end user, none of this was apparent. The situation was in fact like this: additional data gave folks better insight into what was currently going on in the market. But those folks, who would trade, were trading VIA the brokerage firm. And all trading activity was supervised, at least insofar as compliance was concerned. There are many regulations which must be operated in compliance with- all designed to protect the investor - and the beauty of the software was that it made it seem like you had "direct access". But there was no such thing in reality. Just like a cruise ship has nice smooth hallways and chandeliers, it is an illusion of sorts. The cruise ship has pipes and wires running everywhere - but you can`t see them because they are hidden beneath a carefully made veneer. Just look in a merchant ship sometime. Endless systems in plain view. Increadible complexity. So what the heck does this have to do with private capital formation? A lot.

There are gazillions of regs governing the sale of non-registered private offerings.     They are complex, and the punishments for violation are draconian. The regs, as silly as this sounds, are designed to protect the investing public. They should be in place because there are a lot of scammers out there, and investors deserve some sort of protection. But my point is this: it is a flawed concept to try and cut out the middleman. The process is so complex that you want the involvement of pros. Now if you could come up with a system that takes all of the regs into account and works to provide a user interface that is useable and not intimidating (the cruise ship) why then you`d have something. But the idea you have now, though noble, would lead to the fleecing of a lot of people - and likely jail time for the operators. But don`t take my word for it, look around.  This, by the way, imho, is one of the reasons that none of those websites out there claiming to introduce entrepreneurs to investors, and there are dozens, seem to work.