August 16, 2013
As an investor in 60 startup companies, my concern is that the 1 year "penalty box" is a death sentence for a startup. Capital is like oxygen and while I absolutely believe we need rules and protections for less sophisticated investors, I have also learned that in these early days, startups NEVER have the level of process-sophistication necessary to be 100% perfect at anything.
They are by nature a work-in-progress and tend to make mistakes as every process they encounter is NEW and SCARY. To expect 100% perfection is tough. To add a draconian penalty (they rarely have a year of money in the bank) would scare most teams away from the process that we the country are trying to encourage.
I urge you to consider a 3 strikes rule or a corrective action penalty rather than the 12 month moratorium