Investing in startups

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Demisaba
Posts: 11
Joined: Mon May 13, 2019 10:28 am

Investing in startups

Post by Demisaba » Wed Jun 12, 2019 8:18 pm

How does the mechanics of investing work in startups? These firms are not traded in the secondary market, so they are not available in the trading platforms provided by, say, Vanguard or Schwab. I know there are some SEC requirements to invest in startups. Assume one meets these requirements. Thanks!

Skiandswim
Posts: 119
Joined: Tue Dec 21, 2010 3:24 pm

Re: Investing in startups

Post by Skiandswim » Thu Jun 13, 2019 2:43 am

All startups are high risk and many .. many do not survive past initial funding round. In my experience you get to wait 4-8 years for exit with the successful ventures (excluding the quick turn software firms that the news reports). This type of investing runs counter to BH investment philosophy.

To invest you need to be an accredited investor, with a net worth of at least $1M, excluding the value of one's primary residence, or have income at least $200K each year for the last two years (or $300K combined income if married). There are some secondary market platforms for investing. If you work for a startup you may receive stock shares or options . You need the right skills and understand you may be looking for a new position in a year.

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