There is a rather large missile rapidly approaching America's innovation culture. Predictably, it has been hurled in the most careless of manner by a group of uninformed politicians and their staffers in the form of Senator Dodd's sweeping Banking Bill. Putting aside the merits and thrust of the Bill itself, (which ostensibly seeks to regulate the banking industry), there are two provisions in it which, if not removed ASAP, will essentially wipe out a large chunk of one of America's engines of innovation- namely angel investing. These provisions will raise the bar on the definition of an 'accredited investor' from $1M in net worth or $250K in annual income to $2.3M in net worth or annual income of $450K! It will also hamstring angel investing by slapping any such investment with a 120 day SEC review.
Article Summary:<p>Buried inside of the new banking bill is a provision that will raise the requirements to be an accredited investor. The new bill is proposed by Chris Dodd, the senator from Connecticut. The requirements are increasing from $1m in net worth or $250k in annual income to $2.3 million in net worth or $450k in annual income. Angel investment will also have to undergo a 120 day SEC review.<p><a href="http://hnsummary.com/2010/03/30/get-the-anti-startup-and-anti-angel-provisions-struck-from-senator-dodds-banking-bill/" rel="nofollow">http://hnsummary.com/2010/03/30/get-the-anti-startup-and-ant...</a>
I'm confused why anyone would put this provision in a bill. Does anyone have any background that might fill in the motivation here? They always talk about being pro small business, but this seems fairly blatantly against it.
It's clear that this administration is very much against startups....with government takeover of many industries, healthscare bill designed to tax investments/burden small companies with large health premiums, and now this.
What can we do? Well, unless we remove the politicians that keep voting for these proposals, we will have no choice but to relocate to a friendlier country that doesn't try to kill startups at its infancy. In this day and age, anybody can launch a lean startup overseas.