July 22, 2014
I agree that raising the accredited investor thresholds would be disastrous for startups, job creation and the U.S. economy. We are an angel group in Michigan. Increasing the financial definition of ‘Accredited Investor’ would derail the state’s effort to diversify its economy through start-up companies in a broad range of industry sectors. The state has invested millions the past several years to create a supportive eco-system for entrepreneurs willing to take the risk of starting a new business with technology advantages and high growth potential. We are just now building the private sector culture of high net worth individuals willing to take the risk to support these entrepreneurs. To increase the qualification criteria would devastate this effort. Half of our angel community could fall out of this activity.
It is not just the financial investment that would be lost. Our members provide their most valuable experience and wisdom to the new generation of tech entrepreneurs. Most members have run tech based companies which is where they obtained their wealth. Their knowledge improves a start-ups odds of success as well as increases the potential for financial returns.
The SEC should refrain from increasing these thresholds, should not tie them to the CPI or any other index, but consider adopting knowledge/experience based standards as an alternative.
Skip Simms, Managing Member, Michigan Angel Fund