
How a new bill would reduce the number of angel investors - AndrewWarner
http://stevewelch.tumblr.com/post/550696649/washington-knows-better-than-entrepreneurs-angel
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petercooper
Why are there these restrictions (the existing, lower ones) in the first
place? The Wikipedia entry for accredited investors seems to suggest it's to
"protect" people from losing all their wealth through high risk investments,
but that seems spurious considering casinos aren't limited to the rich.

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rpledge
My guess would be that they want to stop pyramid schemes and the like with
this kind of legislation. Not that I agree that the government should be
controlling how you invest your money, but people can be naive when confronted
with a good swindler.

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gojomo
A good swindler... like a state lotto ticket salesman!

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rpledge
While I agree lotteries are a voluntary tax on the poor, I haven't seen anyone
advertise a lottery as an investment (i.e. a vehicle where there is a
possibility that the original capital can be recouped with profit).

A lottery or casino is gambling in that everyone that participates understands
that the bet is lost on the outcome of a single event. Pyramid schemes, ponzie
schemes, and other similar scams imply the inevitability of a long term return
on investment which is impossible to occur due to the nature of the
transaction.

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TrevorBurnham
Title is a bit misleading since the "how" doesn't come until the middle of
Steve's letter. Here it is:

<quote>

First, the bill would redefine who would be qualified to be an angel investor.
Currently individuals with either $1 million in investable assets or $250,000
in income qualify as accredited investors. The new bill would change this to
individuals with $2.3 million in assets or $450,000 in income. According to
the Kauffman Foundation, this would eliminate 77% of accredited investors.
This single handedly would reduce the amount of capital available to early
stage businesses and stunt our much needed job creation.

In addition, the new bill would require any company attempting to raise angel
investment to seek SEC approval, which would take up to 4 months. As an active
angel investor myself, I can say with certain that companies in this stage can
rarely wait four months for funding. They will simply be forced to close up
shop.

</quote>

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known
Investing cash will create new jobs, spending will preserve existing jobs and
saving cash will destroy jobs.

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zackattack
Can someone please explain why it's preferable to raise money from an angel
than any other citizen, besides connections/networking advantages? What's the
legal reason behind having "accredited investor" status - what can an
accredited investor invest into that a civilian cannot?

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anamax
Angel is a legally meaningless term. Some investors provide benefits beyond
cash in certain cases while others don't.

> What's the legal reason behind having "accredited investor" status - what
> can an accredited investor invest into that a civilian cannot?

Those are two separate questions.

The reason is to "protect" investors.

Companies can accept investment from accredited investors in certain
situations but not from unaccredited ones. These situations involve
registration, disclosure, and other things.

