August 31, 2013
ZINO Society is a membership organization that connects accredited angel investors with start-up companies seeking funding. Over the past 8 years, we have helped facilitate funding connections of around $29 million (of which we are aware) and have coached and mentored almost 600 entrepreneurs. Though there are always many more requests for funding than we can fulfill, we do provide a very important and useful service for both investors and entrepreneurs.
Though I know the JOBS Act was intended to enhance entrepreneurship and growth of small businesses, the "rules" that continue to come forward from the SEC, will cause just the opposite to occur.
In the past, our investor members have had the right to tell us whether they qualify as accredited investors. We supply them with a link that describes what it takes to qualify as an "Accredited Investor" and let them respond to us whether they qualify or not. The new invasive requirement that demands that we have our investor members "prove" that they qualify as accredited most likely will be the end of many people even willing to participate as members and provide angel funding, which will of course be a reduction in business investments.
For our entrepreneur members, the threats that now exist around fundraising are so frightening that huge amounts of time will be required to try to manage all these rules of notification and the penalties are catastrophic if someone makes a mistake. If a deadline is missed, it will likely put many of these entrepreneurs entirely out of business.
What I see on both fronts is that it is likely that ZINO Society will also be out of business because of the reluctance of both investors and entrepreneurs to risk participating going forward unless some reasonable common sense in setting these new rules and regulations is employed.
I assume that putting small businesses out of business is not what was intended and encourage the SEC to look again at how you can simplify the requirements and make them less onerous to all concerned. Thank you.