Offering stock to members of the public is an "initial public offering", which in itself costs millions of dollars just in regulatory costs. Yes, we're still members of the public, except for the millionaires among us.
No, it isn't. As others have mentioned, most HN readers and YC founders are not (yet) wealthy enough to be accredited investors. If you were to try to treat it simply, you would wind up in serious legal trouble, and possibly in prison. Selling shares to any non-accredited investor, who is not a founder, requires dealing with a lot of legal issues, and potentially opening yourself up to significant liability.
The side effect of this law intended to protect people is that the average person can no longer participate in the highest growth sectors of the market. The rich get richer, and the poor don't have as much choice in their investments (and once a company has gone public, its astronomical growth is probably over; it's very rare for a company to be as successful as GOOG or AAPL, and even those, if you'd owned stock pre-IPO, you'd be incredibly wealthy today).
I would love to be able to invest in some of the YC companies, other than my own, but I don't have that ability yet. But, the first few rounds of YC companies have produced some accredited investors already, so the circle of available investors who "get YC" is getting wider.
You could get a personal loan from friends and family, and then roll the money into the business, but you can't sell shares without dealing with the extra paperwork and liability.
Being an accredited investor to invest less than $10,000 in a small web startup sounds ridiculous to me, especially if one has good knowledge of the startup's business environment and a rapport with the founders. If it's the law, so be it, but there'd have to be a legal workaround for hackers to connect with another hacker's startup financially.
This must be Deja Vu, I remember having a conversation with you about Barack Obama after his election win in a thread where I lost over 60 points.
-- I wonder how bpick is able to invest legally in this case, because I don't think he fits with the accredited status but is still looking for investments.
Yes, it is ridiculous that you and I can't invest in our friend's companies without significant enough hassle that no small company would be interested in such investment (I wouldn't take money from non-accredited investors, even if we really needed money). I'm sure I'd do better investing in Dropbox and Weebly and Wufoo than I would investing in the stock market in general.
I don't recall a conversation about Barack Obama, but I talk a lot, and I don't remember everything I say, so it could have happened. Anyway, I think it'd be a great reform of our investment law, if normal people could buy stock in small companies, without all the hoops and craziness required. This is particularly true now that IPOs are so much less common; it takes years before normal folks have the right to invest in a new company. SOX has eaten up even more of the extremely rapid growth curve of new companies, from the perspective of regular people.
