Proposed SEC Rule Expected to Eliminate More Than Half of Angel Investment Capital

CFB New Wire, Experts Argue Change to Existing Accreditation Standards Will Reduce Growth of New Businesses and Job Creation

Art by Mike Lucas

Art by Mike Lucas

(Shreveport, LA) – VC Experts (, a leading source of private market investment information, and the Angel Capital Association, (ACA) are questioning an SEC proposal to change the qualifications for accredited investors. Analyses by VC Experts and ACA indicates that the SEC’s plan to make more stringent the financial requirements for angel investors to become accredited is likely to have a devastating effect on startups and job creation. The review of accreditation standards, which is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, is projected to eliminate about 60 percent of eligible angel investors.

“I do not know of any issues of importance to our economy that can match the imperative of maintaining accredited investor status as it now exists,” said Joseph Bartlett, VC Experts Co-Founder and an attorney at McCarter & English, where he represents emerging growth companies and the VCs and angels that provide their funding. “The cornerstone of economic growth in the United States since World War II has been the availability of venture capital for the likes of Microsoft, Google, Apple. It is, of course, true that many (or most) business startups fail; but if the solution is deemed to be steps to minimalize the opportunities for startups to get funding, we are approaching the end of the road. ”

According to Bartlett, the rules changes would be compounded by the fact that venture capital has already departed the startup community in favor of mezzanine style growth capital investing. Startups have become critically dependent upon angels. Data compiled by the Brookings Institution and Kansas City’s Kauffman Foundation reveals that business startups have been in a steady decline over the past three decades and are now outpaced by business closures. The Center for Venture Research at the University of New Hampshire research indicates that 71,000 companies benefited in 2013 from $24.8 billion from Angel investments.

“The Angel community is what fuels emerging growth companies in this country today,” Bartlett said. “And, this cry of alarm about increasing the difficulty of qualifying as an angel must be taken seriously. Without this phenomenon factored into our economic landscape, the evidence is clear there will be little growth or job creation.”

Currently, an individual accredited investor is defined as someone with $1 million in net worth, excluding the value of a primary residence, or annual income of $200,000. At issue with the SEC proposal is whether these financial thresholds should be arbitrarily raised based upon inflation.  Source :

Tags: , ,


MarketWatchWhy a crowdfunding site is giving out $10000 scholarshipsMarketWatchCrowdfunding site GoFundMe announced Thursday that it will award $10,000 to 10 students with pages on their site that fundraise for education. The award is part of a contest the site held throughout Septemb [...]

BloombergCouples Desperate For Children Turn to Crowdfunding FertilityBloombergCrowdfunding has become a popular mechanism for many couples who can't afford the high costs of IVF, or adoption and surrogacy. “It's not an easy thing to share publicly,” says Crystal Barrett, 33 [...]

Crowdfund InsiderBrief: GoFundMe Presents $100000 in College Scholarships to 10 StudentsCrowdfund InsiderTo qualify for the scholarships, each student had to create a crowdfunding campaign on GoFundMe, shared stories about the obstacles they had overcome in pursuing their education, h [...]

Huffington PostReal Estate Crowdfunding's Pathway of ChangeHuffington Post“Crowdfunding is just the Internet,” stated Attorney Mark Roderick as he opened last month's RealCap Chicago. RealCap is an annual conference that joins crowdfunding leaders and innovators to propel th [...]

Smart From The Start: 3 Ways To Properly Establish Your Business When CrowdfundingCBS LocalConsequently, burgeoning entrepreneurs have turned to crowdfunding platforms to get the seed money they need to get business ideas off the ground. However, seeing as 98 percent of crowdfunding p [...]

Crowdfund InsiderTitle III Crowdfunding Might Not Be What Many ExpectedCrowdfund InsiderI have been immersed in the equity crowdfunding industry since late 2015 and have tried to collect as many different perspectives on the industry from as many experts as possible. And while it is h [...]

The RegisterHardware ain't hard, money is: Crowdfunding, bootstraps and startupsThe RegisterHmm, I think we call this bootstrapping in IT, or in our case crowdfunding. Raise enough money to get the first shippable product and ship it. (I did once work on a "big" defence [...]

Crowdfund InsiderSEC Schedules Open Meeting on Rules 147 & 504 Impacting Intrastate CrowdfundingCrowdfund InsiderMary Jo White October 30 2015 The SEC has scheduled a meeting to consider proposed amendments related to Rules 147 and 504 – securities regulations that impact intrasta [...]

ExtremeTechNew crowdfunding project promises an ATX motherboard for IBM's Power8ExtremeTechWe don't cover many crowdfunding projects at ExtremeTech, because most of the pitches we get are frankly terrible. While we can't make any promises about any crowdfunding project [...]

CoinTelegraphCrowdfunding vs. ICO: Experts Question Legitimacy and Guarantees of Initial Coin OfferingsCoinTelegraphOne major difference exists between traditional crowdfunding methods and ICO, and that is market value. When a product is introduced on crowdfunding platforms like Indie [...]

CFB Finance

Press Release

CrowdFund Beat News

Hello @CrowdFundBeat's 17296 followers - thank you so much for following! Wishing you all a happy Friday! >>

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |