August 23, 2014
DID YOU KNOW: IT IS ILLEGAL TO INVEST IN STARTUPS IF YOU ARENT RICH
Trying to combat this, a group of innovators we able to get a bill passed called the “JOBS ACT” which allows everyone to invest in startups with limitations. What went wrong? As usual the Government and SEC added layers upon layers of red tape and years later the section of the bill known as “crowdfunding title III” is still not legal.
Crowdfunding Title III (general public equity crowdfunding) rules are overly complex, inefficient, and not economic, for neither the investors nor the entrepreneurs.
I have an Idea: If a person is knowledgeable, knows the risks they are taking, and agrees to assume the risks, then why should there be a law preventing that person from doing whatever they want to do with their money. After all we can go to the casino tonight and blow our life savings and the government does not provide any protection for that.
Here is a simple solution.
Lets propose an additional qualification to the SEC’s legal definition of an accredited Investor………
You meet the net worth/income requirements (your are rich enough).
Poorer investors take a 4 hour class on fraud, pass a test, and sign an affidavit of risk”
Now you are qualified as “Accredited” and free to Invest and diversify as you wish.”
THAT’S IT: No limitations, No complexity, No red tape.
Upon passing of this simple change, the private capital markets have opened to everyone in the country who chooses. If there are presently only 6 million accredited investors in the world, can now potentially add the other 307 million people in the United States. Imagine the potential, no more 1% vs. 99% perfection is 100%.
Crowdfunding title III becomes obsolete and we have completely changed the private capital markets in a sentence or less.
I would love to get comments, thoughts, Ideas, and help proposing this into a bill.