The Internet investment money tap is open full force. I see it
everyday. Wondering why you haven’t found the right inside track to
instant wealth-building investments?
Many of you may not realize how grass-root investment opportunities
are really only targeted and available to the rich. There are several
reasons. However, the ones I absolutely hate are the government
regulations at the state and federal levels. These regulations really
keep the investment club closed to the general population. The
justification is always “to protect the people.” I call it removing a
freedom. There are horrible regulations in place that build a wall
between most people and opportunity. They don’t know what they are
missing out on. If they don’t know, it won’t hurt them, right?
I’m always amazed how easily one can buy all the losing lottery
tickets they choose at the corner market. Qualifications to play remain
basically unregulated, with the exception of age and whether or not you
have a dollar. You can earn a hundred dollars a day and spend half of it
on lottery tickets at a zillion-to-one odds. No regulation, no one
Start up a company, get your lawyer, raise some money by creating an
opportunity for others. You may find that you have to turn down your
brother-in-law’s $2,000 of annual expendable cash. There’s a wall
between him and a ground floor 50-cents-per-share opportunity.
However, in the future “after” the IPO occurs he can now take the
same $2,000 click-and-buy 100 shares with his on-line broker at $20
each. No prospectus on the company. No knowledge of what the company
does. Just a simple click.
Or your brother-in-law can go to Las Vegas and risk it all on one
hand of blackjack or a single spin of the roulette wheel. He doesn’t
fill out an application to qualify to gamble. Again no regulation. No
Here’s how a broker offers IPO shares. First, they weed out customers
by only informing people who have a balance of six plus figures or more
in their account. Then, they tell you of the URL qualifying
questionnaire. If it looks like you don’t need to invest in these
opportunities they will let you invest. Of course they will use words
like these “We will notify you immediately online whether you have
qualified to place a conditional offer.” Which really means, “If you
don’t need to invest in these opportunities we will tell you about them
and let you in on it.”
The reality of investing in any company is that it’s all a gamble.
It’s clearly printed on all the paperwork. There’s more warnings on the
prospectus paperwork than at the corner lottery ticket market or a Las
Vegas casino. Yet, to get a real upside opportunity to purchase startup
stock at 50 cents one must have already accumulated $1,000,000 of net
assets and earn $200,000 per year. This is typical. And, oh, by the way,
equity in your principal residence is often excluded in the net asset
For those of you who have never seen such an investor qualification
questionnaire, here are a few questions on the typical “Prospective
- 1. I currently have a net worth, individually or combined with my
spouse, in excess of $1,000,000 (True or False) ____.
2. I had an income, individually or combined with my spouse, in
excess of $200,000 in each of the two most recent years and I expect to
have an income, individually or combined with my spouse, in excess of
$200,000 in the current year (True or False) ____.
Now really, what percentage of people can answer “True” to both
of these questions? Obviously, a small number — only the rich.
However, if you are raising money and are determined to allow your
family members and close friends an upside, you can push lawyers to
configure that Series A round (you’re first) properly (a 504 if you are
in California, I think). Your lawyer probably will advise against you
enabling the participation of those without tons of expendable cash even
if they are relatives. However, push back. Resist lawyers who tell you
“they always do it this way.” Lawyers don’t run your business, you do.
As long as you don’t do anything illegal, you can do anything you
desire. As long as you pay that law office, they’ll work for you.
The best thing you can do is offer your friends and family a
ground-floor opportunity — if for no other reason, someday it will
prevent them from bugging you for not letting them in at the beginning.
Be careful, losing the money of your friends and relatives is something
they never let you live down. Of course when you make it and didn’t
invite them to invest, they continuously remind you that you didn’t
offer. They won’t let you live that down either. You are damned if you
offer then lose it. You are damned if you don’t offer and make it for
just yourself. However, if you do offer and make it, you are placed up
on a pedestal. You have made them some money; in theory they won’t feel
the need to knock on your door.
You will also have “qualified investors” in your Series A. After
closing your Series A (often limited to raising a million dollars,
varies by state) you can then immediately raise a serious B round full
of the traditional “qualified investors.” However, that first round
better have raised enough money that enabled you to complete some R&D,
launch a service or send a product into initial production. If that A
round failed to accomplish, serious investors are not going to take you
seriously. Serious investors take you seriously when they see
accomplishments that can prove cash flow is around the corner.
Continuous money raising for R&D doesn’t work even in Internet space.
So now you may know why you are left out of the club. Or, if you are
someone raising money for the first time and a lawyer tells you that
your brother-in-law is not qualified, you can push with the knowledge
that you can create an opportunity for more friends and family.
Last week I talked about streaming and fiber bandwidth of the future.
Here’s a few of the responses:
Craig @ info2000.net
We have two major fiber optic lines running within a few feet of the
house but we live in the country, and our electricity is provided by a
co-op where the people get together to provide their own electricity
because no one really wanted to put up electrical lines commercially. So
when judging the mentality of the fiber optic companies I’d say they are
building a highway from New York to Los Angles with no on or off ramps.
They never engineered a simple cheap way to hook up the local user so
I’d say streaming video is 20 years away here in the rural areas.
Raymond @ postoffice.att.net
I can’t help but think of the TV of the future as being one big
“browser,” but I do. I guess we have a long way to go before that
happens, but maybe not. The PC in its current state of video streaming
is the ultimate beta and off Broadway test for the future of Internet
broadcasting. And although pioneering is not cheap or easy, it’s
certainly fascinating nonetheless.
It’s kind of like the railroads and automobiles all tied in together
instantly. Providing the nation with a solid means of entering the 21st
century. Just think about it, where’s a man like Herbert Hoover when we
need him. We can go from a “chicken in every pot and two cars in every
garage,” to T-1 lines in every home and video conference a normal
everyday occurrence. Broadcasting could then become something worth
watching since the dominate media restraints would be lifted and the
playing field even.
Steve @ cctc.net
If PC streaming were common, it would be like everyone having their
own TV station. This would be as big a revolution as the printing press
and the Internet itself. And yes, the giants’ big steps to dominate will
succeed, but the results of such a revolution in communication beyond
the profits generated by the giant companies that carry the data, are
Basically, all of the responses felt that streaming TV was just
around the corner.
Got an Internet topic you would like addressed ? I am always open to
Internet-related suggestions. I would like to hear more about what you
would like to learn about the Internet. Send me an e-mail