"I'm from the government and I'm here to help you."
Entrepreneurs looking for investors know about "accredited investor" status and the myriad benefits it provides. In a nutshell, if you investors are accredited, aside from complying with many federal and state security regulations, it makes it difficult for investors to later claim they didn't understand the investment thesis. The premise is that having sufficient net worth makes the investor more sophisticated. (Ok, we've all met the guy who's the exception, but that's for another time.)
In addition, there's a federal exemption of state laws regarding Reg D that makes raising investor money in more than one state more do-able.
Now comes Sen. Chris Dodd with a bill that proposes to raise the $ definition of accredited investors and do away with the aforementioned exemption. Read about it here.
My position on this sort of thing is that it's only important at the margins - but here we have a situation that benefits nobody and makes it much more difficult for entrepreneurs to successfully find investors.
Because? Perhaps you may want to send a note to your representatives.
And the National Venture Capital Association and the Angel Capital Association have both weighed in. Here's their letter: Download NVCA-ACA Letter on Dodd Bill .
