What do you think of this 10K micro-funding idea?
blog.tweetfolk.comI think it may well likely violate SEC and/or lottery regulations.
From what I read, it sounds like you're running a lottery (buy a square for a chance to win $10k).
Then on top of that, you are calling the $10k an 'investment', which I think means that YOU have to be potentially considered an accredited investor if it's an investment and not a loan.
Aside from that, the kind of business that only needs a $10k investment is also likely to be one that it will be a VERY long time before that business can shake loose $10k of their own to give away as an investment (please deal with the legal issues of doing so)
I seems like a nice idea, fraught with grey legalities that you should probably at least get professional advice on.
According to the lawyer that I spoke with, I think I'm ok from a legal stance because you're not actually buying a chance to win 10k. You're buying a product (advertising on TweetFolk.com), and I'm simply selecting an idea from the pool of customers and making an investment in them.
From an accredited investor point of view, I don't think that applies. I've spoken with a number of VC friends of mine and they said that I'm in the clear. I can give 10K to anyone I want, from my wife to a random stranger I've never met before. The terms are just based on the agreement.
As for shaking off $10K being a very long time, I disagree. Many startups kick off with 10K and make a profit in their first year, especially in the product space. 10K is enough money for a young person to leave their job for a few months to build an invoice suite or iPhone application. It's just enough freedom to let you move on your idea.