Attention Suckers: Please Send Us Your Money
“Those almost 10,000 early investors on Kickstarter participated in one of history’s most lucrative funding rounds from the perspective of the people receiving the funding: a $2.4 million early-stage investment in what would become a $2 billion business in a year and a half, in return for 0.0% equity.”
— WSJ's Corporate Intelligence on Oculus's crowdsourced 2012 fund-raiser.
Caveat Emptor, baby!
With Facebook acquiring virtual-reality company Oculus, one of the all time great sucker plays — the “Jumpstart Our Business Startups Act,” signed by President Barack Obama on April 1, 2012 — has been revealed as the massive bait-and-switch it is. (The JOBS Act? Hows that for a misleading title?)
It is relatively uncommon for the chairperson of the SEC to object to new deregulation, but when new laws are thought to be anti-investor, it's no surprise. Regardless of strenuous objections, the JOBS Act became law, making it all-too-easy for companies to raise money. It was more of the same radical deregulation that helped cause the financial crisis. This was not about making markets work more smoothly, but rather, an extreme form of “smash & grab” capitalism.
Bill Black called it a “recipe for fraud.” But Professor Black was wrong — it's not a fraud, it’s a scam…
Keep reading: Attention Suckers: Please Send Us Your Money – Bloomberg View.
