August 16, 2013
The Wisconsin Angel Network is an organization that represents angel and other early stage investment groups in Wisconsin, one of the leading states for angel investing in the United States. Im writing in regards to two issues: the final Rule 506 regarding general solicitation, and proposed rules to expand the scope of Regulation D and Form D.
In the past several years, Wisconsin angels have consistently invested tens of millions into startup companies, helping entrepreneurs grow their businesses and create new jobs. Just in 2012 alone, more than $67 million was invested in early stage companies in the state. These efforts should not be damaged through new government regulations that were meant to Jumpstart Our Business Startups.
We recognize that the JOBS Act required issuers to take reasonable steps to verify that investors are accredited when relying on Rule 506(c).
However, reasonable steps should not include disclosure of personal financial information by angel investors already well-versed in the startup economy. Active angel investors are both accredited investors and knowledgeable about the risks of angel investing. This combination of fact and circumstances provides richer validation than a federal check-the-box method.
The Wisconsin Angel Network, along with the state groups and individuals signed on to this letter, request that the Commission take two actions: Withdraw the proposed rules requiring additional Form D filing requirements for startup companies. Also, establish that the verification requirement of Rule 506(c) be met if an issuer verified that a purchaser is a member of an established angel group or is otherwise engaged in the startup community and provides written representation that he or she is an accredited investor.
Wisconsin Angel Network, director
Angels on the Water
Phenomenelle Angels Fund I, LP
Phenomenelle Angels Side Fund I, LLC,
DaneVest Tech Fund I, LP
DaneVest Tech Side Fund, LLC
Chippewa Valley Angel Investors Network
Wisconsin Investment Partners
Jeff Rusinow, individual angel investor/board member, BrightStar Foundation