Dodd's Financial Reform Bill Makes the Angels Cry
Angel investors, that is. Why, and some reactions, gathered at VentureBeat:
Dodd's bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an "accredited investor" who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states…..
Investors offered….criticism on Twitter, with Slide vice president Keith Rabois tweeting, "Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?"
Rabois, an early PayPal employee and angel investor, has a strong libertarian/anti-regulatory political stance, but liberals hate these restrictions, too. Chris Sacca, an angel investor and former Googler who campaigned for Obama, also tweeted that people who "care about startups and making sure they have access to capital" need to sign a petition against the investing regulations.
I asked Sacca for more details about his opposition. In a voicemail, he said:
Obviously, I'm deeply concerned about Senator Dodd's proposal to place these restrictions on angel investing…..
Specifically, one of the things we need to take into account is while 10 years ago it may have taken years to build a company, companies are now built in a matter of weeks. So this 120-day waiting period is frankly ridiculous. I have companies with tens of thousands and hundreds of thousands of users that are built in a matter of weeks. They're generating actual dollars of revenue, creating jobs, investing in real estate office space, capital equipment, etc. If they had to wait 120 days to actually apply for the ability to obtain financing it would absolutely just crush that market.
Anthony Randozzo wrote on Reason Online back in November on other things to hate about the Dodd bill. The 11-page version of what the bill will do.