June 10, 2014
Dear Chairwoman White:
Thank you for the opportunity to provide comments regarding the
ongoing Securities and Exchange Commission review of the accredited
investor standard.
The Wisconsin Angel Network is an umbrella organization that
represents and supports angel investors, networks and funds that
provide capital to entrepreneurs in Wisconsin and elsewhere. As
director of the organization, along with the groups signed on to this
letter, we urge the Commission to protect angel funding by keeping in
place the existing financial thresholds in the current accredited
investor definition.
The current thresholds of $1 million in net worth or $200,000 in
income has worked well for decades and led to the growth of more than
20 early stage investment groups in Wisconsin alone, and millions in
funding to state entrepreneurs over time. Angel investors are a major
source of funds for companies that drive the innovation economy and
job-creation nationwide, and do so with very little fraud involved.
If the financial limits were increased, angel investment in
early-stage companies would suffer. An increase in the net worth
threshold to $2.5 million, advocated by some, could cut upwards of a
third of current accredited investors out of some markets, according
to the Angel Capital Association, of which we are affiliate members.
Such an action would cause a significant reduction in the number of
accredited investors, especially in places such as Wisconsin, where
the prevalence of large amounts of wealth is not as common as some
other parts of the country. It would also cause issues for
entrepreneurs in a state where venture capital is not as prevalent. A
contraction in angel investing could also stall local economic
development, university technology initiatives, and stem innovation
and job growth. In short, a higher threshold would widen the flyover
state funding gap.
Angel investors have been growing in number across the country and the
activity has been largely free of fraud. Often, this is related to the
hands-on approach many individual angels and groups, including those
in Wisconsin, have in advising and mentoring the entrepreneurs they
back. Because of the importance of angel investing to job growth, and
the future of the United States economy, we urge the Commission to
maintain the current thresholds for accredited investor
classification.
Keeping the current thresholds would continue to recognize the vital
role sophisticated investors can have in supporting innovation and
economic growth in places like Wisconsin and across the United States.
Thank you for your consideration.
Sincerely,
Dan Blake
Director, Wisconsin Angel Network (Madison)
Additional support:
Golden Angels Investors
Wisconsin Investment Partners
Chippewa Valley Angel Investor Network
Shannon/Harris Shamrock
Angels on the Water
Northwoods Angels
New Richmond Angel Investor Network
Yahara Angels Network