August 20, 2013
I am an entrepreneur who is currently fund raising for a start-up. I am very concerned about the current proposal. I believe that the current proposal is too restrictive on start-ups and creates requirements which are actually a blocker to the start-up fund raising process by putting in place undue paperwork and other deterrents. It will increase costs by requiring me to spend more on legal fees to ensure that I am not breaking the rules. The issues created seem to fly in the face of the spirit of what was intended with the JOBS act. I agree with protecting the uninformed investor but this complicates the process unduly.
Some examples of the issues...
In the last 12 months (during which I have entirely self funded the start-up) myself and my co-founders have changed our plans a number of times. We expect to continue to do so. The reporting requirements over the plans and description of the company are too restrictive.
In the last 12 months I have had preliminary and exploratory discussions with potential angel and venture investors. We change our plans and presentation after almost every discussion. The requirement to re-file paperwork after every meeting to far too strict.
The penalty of one year fund raising ban is draconian and I agree with it's characterization of being a death sentence for stat-up's of my size and position.
We propose the suggestions made by Angel List and other such sites to improve the proposal and at the same time protect potential investors. In this day we need a modern solution, not one based in excess paperwork and process.
The Angel List letter - http://www.sec.gov/comments/s7-06-13/s70613-37.pdf
I am pleased to add my voice to this discussion and hope that you will recognize that it is truly start-up's of my scale and status (e.g. 3 self-funded co-founder's spending their own money to create a new co. that is pre-revenue)
ceo - co-founder - gopop.tv