Venture Capital and Penny Stocks A Startups Primer

For those under 30 who do not remember either The Fonz or Catfish Hunter, here are excerpts from Wiki on Penny Stocks:

“Penny stocks…are common shares of small public companies that trade at less than $1.00. Penny stocks are considered to be highly speculative and high risk, but have a large potential for profit……they are targets for price manipulation. Individuals or organizations have bought up hundreds of thousands, or even millions of shares, and then used websites, press releases, and e-mail blasts to drive interest to the company’s stock. Very often, faulty or misleading information is provided, resulting in investors buying shares in the underlying company.”

In order for penny stocks to thrive back in prehistoric times, the stock had to be “listed” somewhere, as Wiki notes, “Penny stocks are often traded over-the-counter on the OTC Bulletin Board, Pink Sheets, and other institutions such as NASDAQ (modern times).”

Today, the Pink Sheets are at AngelList and CrunchBase. Instead of just a price and an up or down daily arrow, we can follow the minute by minute chained addition of angels, seeders, advisors, videos, and dollar signs. We can click on the Startup Co website and either see a working model of some form of relational database or just sign up for a stealth preview of said database.

The difference between the historical penny stock market and the current disruptive one is that, in most cases, the pumping of thousands of startup 125 x 125 logos collected by Venture Capitalists on their websites like baseball cards is not to make money on a particular Startup/Stock, but to create an entire marketplace or league (like the English Premier League) that can command massive revenues at the IPO level for a relatively few people.