Employees and Customers as Investors?

Question

I was reading a post on HN today about tech coops. I was wondering what are the challenges (and even if it is legal) to make customers as your investors. For example, as a tech startup coop, I can share profits with employees. But what if I offer that option even to customers if they invest in the startup? Has any startup done this before?

orbz · Accepted Answer

Depending on the jurisdiction this can be a rather problematic undertaking. There may be restrictions on who can invest in unregistered securities and burdensome reporting requirements when you cross certain thresholds in number of investors. Check out the concept of accredited investors and SEC reporting requirements.That said I think a number of startups (possibly Reddit as well) that have tried/are trying this via web3 tokens. The regulations with that are a bit grey and you can expect more policy to be formed. Additionally the foundation of decentralized governance is still being built with lots of bugs still to work out.

dv_dt · Answer

I would try to find some local resources to talk to that have some experience in this. One place to maybe start is: https://www.fiftybyfifty.org/research/employee-ownership-res...