First of, there is a way: if you're confident that a start-up you like will succeed, you can invest in it by joining at a sub-market salary and taking a high equity stake. This way you're investing ( $market_rate - $negotiated_rate ) * 4.
Yet this approach has issues: you can't join multiple start-ups at the same time and of course you're taking a long term and substantial risk. Yet it also provides a filter of "investors": if you can get hired in start-up run by competent people, presumably you're able to judge the likelyhood of a start-up's success.
If we take substantial public investments in start-ups, we'd have people with no domain knowledge and in no financial shape making investments in start-ups that generate the most (or the most targeted) PR. This is very much what happened during the housing bubble (people with no knowledge of real estate buying "investment properties" using borrowed money at prices they couldn't afford to pay).
Bottom line is that investment in a start-up is risky. There are tons of faux-entrepreneurs who'd abuse this method as a chance to flip a quick buck (take an initial investment, float more and more PR about the company and sell their stock for a profit to investors who took are hoping for a quick profit).
There is another issue everyone is talking about: public markets are effectively closed for <$500mm companies. M&A is slowing, especially at prices between $100mm and $1bn -- the types of companies that are too big for Flickr-style exit and too small for an IPO.
Running a profitable mid-size company may be great for the founders (take bonuses/receive dividends after hiring a professional to run the company while you either step-away or step-down to a CTO/VP of Engineering), but what about the employees? The employees in this situation are not likely to see anything for the equity, other than through secondary private equity markets (which are not common in cases other than Facebook and are limited).
This leave employees screwed: either wait for the "next Google", work at a public company (where the equity may be worth something, but the quantity of it isn't substantial and you have little ability to affect the worth of your equity), be employee 1-5/founder of a small "built-to-flip" company (limits you to, essentially, consumer web-start ups) or work for a salary/bonuses.
Here's an idea I'd suggest: allow limited sales of early equity by employees to non-accredited investors who believe that the company will achieve phenomenal growth later on making their equity worth something.
First of, there is a way: if you're confident that a start-up you like will succeed, you can invest in it by joining at a sub-market salary and taking a high equity stake. This way you're investing ( $market_rate - $negotiated_rate ) * 4.
Yet this approach has issues: you can't join multiple start-ups at the same time and of course you're taking a long term and substantial risk. Yet it also provides a filter of "investors": if you can get hired in start-up run by competent people, presumably you're able to judge the likelyhood of a start-up's success.
If we take substantial public investments in start-ups, we'd have people with no domain knowledge and in no financial shape making investments in start-ups that generate the most (or the most targeted) PR. This is very much what happened during the housing bubble (people with no knowledge of real estate buying "investment properties" using borrowed money at prices they couldn't afford to pay).
Bottom line is that investment in a start-up is risky. There are tons of faux-entrepreneurs who'd abuse this method as a chance to flip a quick buck (take an initial investment, float more and more PR about the company and sell their stock for a profit to investors who took are hoping for a quick profit).
There is another issue everyone is talking about: public markets are effectively closed for <$500mm companies. M&A is slowing, especially at prices between $100mm and $1bn -- the types of companies that are too big for Flickr-style exit and too small for an IPO.
Running a profitable mid-size company may be great for the founders (take bonuses/receive dividends after hiring a professional to run the company while you either step-away or step-down to a CTO/VP of Engineering), but what about the employees? The employees in this situation are not likely to see anything for the equity, other than through secondary private equity markets (which are not common in cases other than Facebook and are limited).
This leave employees screwed: either wait for the "next Google", work at a public company (where the equity may be worth something, but the quantity of it isn't substantial and you have little ability to affect the worth of your equity), be employee 1-5/founder of a small "built-to-flip" company (limits you to, essentially, consumer web-start ups) or work for a salary/bonuses.
Here's an idea I'd suggest: allow limited sales of early equity by employees to non-accredited investors who believe that the company will achieve phenomenal growth later on making their equity worth something.