A few of my favorite entrepreneurial groups (NC Spark and TheFunded.com) have been buzzing in recent weeks about the current Chris Dodd financial reform bill. I submitted my support for one of the online petitions collecting signatures against this proposed legislation this evening. I am strongly against the suggested 120 day waiting period before a startup could receive funds raised from investors. I am also strongly against the increased bar on accredited investor status which is proposed to be raised from $1M in net worth to over $2M in net worth. Some estimates say that the accredited investor requirement change would remove nearly 70% of the options that startups have when raising money from wealthy individuals referred to as angels. Here are the details I included as I signed the petition this evening: Adding anything that slows down the process of raising investment capital for startups is counter productive. These companies embody the American Dream and the current flexibility in the system attracts innovation to our country. A 120 day waiting period and a higher bar for accredited investment status will slow innovation and job creation in startups in this country. In this economy, as we are all starting to dig our way out, these new restrictions pose one more challenge to new ventures.
Below is the message that TheFunded.com sent out to its nearly 15,000 members this evening. Please get involved, sign the petition, and spread the word about all of the damage that this proposed legislation would do if it becomes law. The brilliant entrepreneurs who create new ventures don't need anything else making the challenge even more difficult and our community doesn't need another roadblock standing in the way of new job creation.
------------------------------------------ Save Angel Investing --------------------------------------- The US Senate Committee on Banking chaired by Senator Chris Dodd of Connecticut is proposing changes to angel investing buried within the "Financial Reform Legislation" on the floor of the Senate now. The reforms will effectively double the standard to be an "accredited investor" in the US, which most estimate will reduce the pool of accredited investors by over 70%. Additionally, the proposed legislation requires that financings, whether accredited or not, must be registered with the SEC, and the SEC has up to 120 days to respond. If the SEC does not respond, the financing goes to the applicable State organizations for review.
Reducing the number of accredited investors, slowing down the investment process significantly and adding considerable cost to small financings will decimate angel investing. For all US Members, unless you want to wait for months to get a wire after your next financing is closed, please take a moment to spread the word and call Senator Dodd, as well as your own State Senator.
LEGISLATION CHANGES: - Amend Section 926 to exempt startups from SEC filing, state regulation, and 120-day review. - Strike Section 412 to prevent 77% of current angel investors from losing their accreditation.
CALL SENATOR DODD: - DC: 202-224-2823 - CT: 800-334-5341 - http://www.senate.gov/general/contact_information/senators_cfm.cfm
TWITTER HASH TAG: - #SaveRegD