Anyone Will Soon Be Able To Invest In Startups And That Is BAD News!

One thing everyday investors can't do right now is get in on the ground floor of new startups. They also can't get the IPO prices that all the bigwigs get before the companies stock actually opens on that first day of trading on an exchange. Most investors are relegated to buying stocks only when they open up for general trading, often when the first price available is much higher than the insiders got.

But with a new recent ruling from the SEC, opportunities to invest in some startups may soon be available to everyone early on in a companies history. It will sort of be a Kickstarter for startups and honestly, that might be a bad thing for investors who don't understand the risks.

Kickstarter started out as a site where you could go to fund cool new products that needed money to get off the ground. Usually helping them fund their product meant that you were promised the item when and if it was ever finished. But over time the site has had to deal with a lot of fraud, projects that never got off the ground, products that were inferior to what was promised, and a whole lot of other things.

The bottom line is that if you decide to back a Kickstarter project, you should fully be prepared to get nothing back for your money. And that will be the inherent risk anyone takes when investing in a startup as allowed by this new SEC ruling.

Think about this: most people have a hard enough time learning how to manage their portfolios and beat the markets that are full of established companies with long track records and extensive product portfolios. How on earth will investors be able to correctly evaluate new startups where information is limited and there is no history to base any decision on?

Crowdfunding has taken off in recent years and it looks like it is spreading to the investment world. For many, it will mean taking shots and hoping for a miracle. It will also mean that you will open yourself up to potential fraud and other shenanigans. It just seems to me like another way to play the lottery and that many investors will think of it that way. I think this one will fall under the category of "investing for dummies"