What a market does, idealizing egregiously, is that people with special knowledge or insight invest into things early: Thus less informed people (some of whom have more capital) can watch the valuations, and invest into projects with high and increasing valuations or some other valuation-based marker of quality. A process of price discovery.
AngelList, for example, facilitates that. They have a no-action letter from the SEC (and the startups on AngelList have at least a registration D I imagine), so they didn’t have to register as a broker-dealer to be allowed to match startups to investors. I think they have some funds that are led by seasoned investors, and then the newbie investors can follow the seasoned ones by investing into their funds. Or some mechanism of that sort.
We’re probably not getting a no-action letter, and we don’t have the money yet to start the legal process to get our impact credits registered with the CFTC. So instead we recognized that in the above example investors are treating valuations basically like scores. So we’re just using scores for now. (Some rich people say money is just for keeping score. We’re not rich, so we use scores directly.)
The big advantage of actual scores (rather than using monetary valuations like scores) is that it’s legally easy. The disadvantage is that we can’t pitch GiveWiki to profit-oriented investors.
So unlike AngelList, we’re not giving profit-oriented investors the ability to follow more knowledgeable profit-oriented investors, but we’re allowing donors/grantmakers to follow more knowledgeable donors/grantmakers. (One day, with the blessing of the CFTC, we can hopefully lift that limitation.)
We usually frame this as a process of three phases:
Implement the equivalent of price discovery with a score. (The current state of GiveWiki.)
Pay out a play money currency according to the score.
Turn the play money currency into a real impact credit that can be sold for dollars (with the blessing of the CFTC).
Frankie made a nice explainer video for that!
What a market does, idealizing egregiously, is that people with special knowledge or insight invest into things early: Thus less informed people (some of whom have more capital) can watch the valuations, and invest into projects with high and increasing valuations or some other valuation-based marker of quality. A process of price discovery.
AngelList, for example, facilitates that. They have a no-action letter from the SEC (and the startups on AngelList have at least a registration D I imagine), so they didn’t have to register as a broker-dealer to be allowed to match startups to investors. I think they have some funds that are led by seasoned investors, and then the newbie investors can follow the seasoned ones by investing into their funds. Or some mechanism of that sort.
We’re probably not getting a no-action letter, and we don’t have the money yet to start the legal process to get our impact credits registered with the CFTC. So instead we recognized that in the above example investors are treating valuations basically like scores. So we’re just using scores for now. (Some rich people say money is just for keeping score. We’re not rich, so we use scores directly.)
The big advantage of actual scores (rather than using monetary valuations like scores) is that it’s legally easy. The disadvantage is that we can’t pitch GiveWiki to profit-oriented investors.
So unlike AngelList, we’re not giving profit-oriented investors the ability to follow more knowledgeable profit-oriented investors, but we’re allowing donors/grantmakers to follow more knowledgeable donors/grantmakers. (One day, with the blessing of the CFTC, we can hopefully lift that limitation.)
We usually frame this as a process of three phases:
Implement the equivalent of price discovery with a score. (The current state of GiveWiki.)
Pay out a play money currency according to the score.
Turn the play money currency into a real impact credit that can be sold for dollars (with the blessing of the CFTC).