It works because they force you to use YCombinator’s standard terms, just as if this was Ron Conway investing. So the investors know they are dealing with professional startups and receive all their usual protections: a board seat, preferred shares and so on. But since everything is codified and standardized, we avoid the exhorbitant legal fees (often north of $25K), which really hurt when raising small chunks of money.

Being able to use this service allowed us to continuously raise money. In effect, it’s as if we could IPO for free every time we needed more cash for operations. The need to go through VCs as gatekeeper pretty much disappeared.

It’s pretty cool!

And it’s also a fantasy. Such a site doesn’t exist yet. Partly because it would be illegal in the US of course (you can’t offer equity for sale to the public, and reporting requirements when you have a large number of shareholders are prohibitive). Partly because building a healthy market, where both sellers (the startups) and buyers (the angels) behave properly, free of scams, is not so easy.

Do you know a way to make StartupIPOs.com? If so, please do it, for all startups’ sakes!

From the blog post summary:

I stole his idea (bullshit, his service was a mailing list when I built PRManna, and there are tons of sites for this purpose)

They’re demanding that I transfer ownership of PRManna.com to Peter Shankman’s company

I am a HARO user. The first thing this news prompted me to do is register with PRManna. Then I sent an e-mail to HARO asking if this is true (I have no reason to doubt the blog post, but it’s always a good idea to double-check).

This case is htting a nerve with me. People who have seen me speak on the topic (I have covered Intellectual Property at several sessions of the Founder Institute) will recognize this image: it illustrates my view of the US judicial system.

The point: anyone with money can sue anyone else who has less money and put them out of business. It doesn’t matter whether you have a case or not.

The HARO vs. PRManna case is a perfect example of what I say in my class: before you enter any market, check out the existing competitors and understand how threatening you are to them. It seems that HARO was making almost a million dollars a year, so of course offering a competing free service was bound to anger them.

Never mind that ideas can’t be protected on a whim (it takes a patent to protect an idea, in case you forgot, and the idea needs to be novel and non-obvious, among many other requirements).

My support is with the PRManna folks until I see some kind of evidence of wrongdoing on their part. I’m not holding my breath.