August 13, 2013
I have been starting and developing technology companies since the early 1990's. I have created companies which have created thousands of good high tech, clean, well paying jobs. It's always been tricky raising money and doing so without violating any laws. The new focus on allowing startups to more publicly raise money was a welcome note. It appears from my review however that a bunch of 1980's bankers crafted the new rules rather than anyone with any sense of how dynamic and fluid you need to be to exist in the startup world. Not to put to fine a point on it but if you don't directly involve startup founders (not just Venture Capital or Investment Banks) in the process you will end up with exactly what it looks like you are about to put into law. Something that ultimately serves no one and will be more dangerous to startups than helpful. So in a word, exactly what I expect to see coming out of D.C.
Now that you know how I feel here are some specific suggestions:
1) Allow for a technology savvy manner of providing filings (where they are necessary). Provide an API that companies (or third parties) can register for access to which will allow for clear, streamlined filing.
2) Since startups are ALWAYS financing require them to maintain proper records but not to continually be filing things with the SEC. The burden of doing so will be too onerous on them.
3) Only require legends and disclosures where terms are communicated.
4) Drop the 15 day in-advance rule. Since the SEC won't even be able to keep up with reviewing in that time frame (unless we multiply the number of SEC employees... oh actually ok we can just grow it to be a huge monolithic agency like insert virtually any agency name here but we can create more government jobs.) The 15 day rule serves nobody. (Sorry to be so flip... DC is in very low regard here lately.)
5) Allow for more confidentiality in Form-D filings. Compliance that provides strategic information to competition is worse than non-compliance.
6) Allow for the various third parties, like AngelList, to provide for conduits for filing without being directly at risk for the non-compliance of the thousands of startups that they server. (For the record I have no direct or indirect interest in AngelList, it just does a great thing for startups and I stand behind that)
Lawrence T. Levine