I’m a firm believer that there is such a thing as Good Government. After all, government is supposed to of and by the people. That’s us. You and me. It’s not supposed to be Us and Them, they are us. Anyway, idealism aside – I do have a few thoughts on the Startup Act/JOBS act thing that just passed the senate.
There are anumber of folks running around hand-wringing about Grandma and Grandpa losing their life savings investing in startups. I fail to see how this is any diffferent than Grandma and Grandpa losing their life savings to the failure of Washington Mutual. Or Lehman Brothers. Or Enron. Or any other myriad, supposedly “safe” investments that were or still are available on the general stock market.
First, startups are inherently NOT SAFE – so if that’s where Grandma and Grandpa are putting their money, with the expectation that it is a safe investment, they are foolish for doing so.
Second, there are bad actors in ANY human endeavor. Whether they are at startup level, or at the VP or even CEO level – there will always be those who game the system and do bad things. It is incumbent upon all of us both in the corporate community and the investor community to be on the alert for these kinds of people, and call them out when we see them.
Third, this is a great time for entrepreneurs and people active in the startup community to start SETTING THE BAR for two important public education points that we should engage with.
- Disclosure – we should be educating everyone we meet, what GOOD disclosure levels look like. Just like there are bad Kickstarter projects and good Kickstarter projects, it should be an ongoing effort for us to help anyone interested in startup investing on what makes for good disclosure.
- Due Diligence – this is a term that MUST become a common phrase heard and understood even among unsophisitcated investors. It is up to us to help also educate people who may invest in startups (even if it is NOT your startup) what GOOD diligence results look like. It’s not hard to understand, and it’s really not that hard to execute. The hardest part is walking away from potential opportunity when the diligence stinks.
This is an exciting time to be a startup, or an entrepreneur; and we have more tools and now more resources at our disposal than ever before. However, a few really bad actors can ruin things for a lot of well-meaning, honest entrepreneurs who really are working hard to build the next great thing.
So let’s help our entire community take things to the next level by educating and inspiring would be investors in what good startup look like.