February 10, 2011
Ms. Elizabeth M. Murphy
Secretary Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: SEC Release No. 33-9177, File Number S7-04-11
I believe the rule should exclude (separate) private investments in startups from alternative investments. The proposed rule would reduce the number of households with the ability to invest in startup companies from 10.5 million to roughly 7.6 million. It is these households that are funding the new energy technologies and innovative information technology startups. These are the companies that will accelerate the global recovery and bring us beyond the 80% mandate for renewable energy sooner than 2030.
Before the dot.com bust and Sarbanes-Oxley, venture capitalists funded these startups after initial seed money (founders, family, friends). It was the venture capitalists and institutional money managers that funded, and therefore responsible for, the creation of the Internet and its subsequent technologies that gave us the wealth of productivity gains and our global technology leadership.
But no more. The venture capital community is not providing funding until a startup is generating revenue. That brings us back to the accredited investor. Startups have to totally rely on these accredited investors to bring the new energy technology through development and into implementation. Eliminating 3 million accredited investors from this funding pool would severely hinder our ability to move new energy technology forward.
The loss of this source of funding needs to be replaced with increased grants (that includes widening qualifications for startups), and provide additional incentives for venture capital and institutions to invest earlier as well as aligning new rules within the scope of a unified energy policy.
I applaud the commission for its efforts to save consumers from scams and fraud. At the same time, however, we must also think forward and consider how new energy startups will be funded and from where. Also, there should be collaborative consideration as to the long-term impact of disjointed rule and regulation changes have on our overall goals for sustainable growth of our US economy.
I would strongly support a concerted effort among the agencies to collaborate on new rules and regulations as well as Congress and the Administration to unify under a new energy policy. Once we have a unified policy, then we all have a roadmap with which the rules and regulations can be modified to align with providing private and public incentives, rather than disincentives, to reach our economic, social and environmental goals of sustainability.
An Investor Relations professional intricately involved in 3 past and present startups that had it not been for accredited and venture capital investors, we would not be the global leader in technology today.