What you're ignoring for rhetorical effect is that startup investing is different from trading the liquid financial markets, and an EXIT STRATEGY is always available for the investors after value has been created by the startup. Especially for sophisticated investors who are likely to be the source of their own exit through future dealmaking and M&A.
There ARE sophisticated investors who expect immediate market liquidity, so that they can realize a loss if they choose to do so, and there ARE sophisticated investors who intend to buy and pump up the market value of the company to bring in new buyers right away at higher prices, so that a profit can be realized based on the hype and the appearance of growth. The former type of investor doesn't invest in startups. The latter type of investor doesn't have any ethics nor any intention of supporting the startup, they're just playing a game and they'll go away the moment the opportunity for gaming the market ends.
You can disparage seed capital formation all you want, it doesn't change the fact that it ALWAYS takes seed capital to set things in motion for any startup. At this moment, if we name you CEO, will you spend $200K just for cleanup of the corporate shell and for re-registration with the SEC?
Maybe your answer is yes because you're personally going to supply $1M in new capital when you become CEO, so the $200K cleanup cost is only 20% of your seed capital and you can easily accomplish your growth objective with the $800K you have left.
I'm expecting to create growth with seed capital, not use it to pay cleanup costs to provide better market liquidity for shareholders. Everyone knows what the EXIT STRATEGY is after meaningful growth and value has been created.
Also, I don't care what the condition is of the corporate parent (ADIA) because it costs very little for the parent to continue to exist in its current condition while developing new subsidiaries which do not have the same problems, risks, liabilities or unknowns -- startup investors will invest in a brand-new subsidiary when they would not invest in the parent, and the parent doesn't have to dilute its existing shareholders when sharing the equity ownership of each new venture with new investors in this manner.
Regulation A+ of the JOBS Act provides startup investors with shares that are free-trading and at lower cost than registering the shares with the SEC. What I expect is that the success of our subsidiaries will attract new buyers for those shares in the future, perhaps with listing of the shares on a Venture Exchange, or individual M&A events, providing exits for investors only after value has been created.
It just does not matter that ADIA is unable to tap into liquid capital markets in the way you describe. Look how Bill Hodson has treated his shareholders in the process of creating a liquid market for LVVV shares! Liquidity is meaningless if there is no value being created.
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