Subject: File No. S7-08-19
From: Mike S
Affiliation: Venture Capital Professional

January 14, 2020

Although I am a highly educated venture capital professional (with multiple undergraduate and multiple master's degrees that includes an MBA from a top-5 program), and I presently work for a venture capital fund that makes investments in early-stage technology startups. The fund where I work is small in size and does not generate enough operating capital from management fees to allow for personal compensation that can meet the annual income thresholds to be considered an accredited investor. Because of my graduate school expenses and the fact that I come from a simple middle class background, my net worth falls fall short of the substantial $1M threshold requirement to be considered an accredited investor. Lastly, there is no formal accreditation process to operate in a venture capital firm, which implies that any new changes to the definition of an accredited investor that stipulate a formal accreditation requirement (e.g., a series 7 license), I would still be precluded from making even small personal investments into a startup of interest. This only serves to fundamentally limit my ability to build wealth and prevents me from deploying capital to early-stage companies that require external expertise and funding to grow/expand.

Thus, despite being a well-educated individual capable of making sound personal financial decisions and being employed by a venture capital firm that conducts risky venture investments as a matter of course, I have no ability to become an accredited investor permitted to make those same venture investments with personal funds unless the existing rules are changed. Government policies quickly become anachronistic and ultimately fail because they are based on overly simplistic, binary criteria that fail to capture any subtlety or nuance of the vast swaths of the population to which the policies apply. In addressing this matter, please eschew that traditional government paradigm and instead consider a real-world continuum of criteria that impact an individual's ability to accept a suitable amount of financial risk. Such elements should logically include some combination of academic education/performance, professional licensing, professional experience and current role, percentage of salary and/or net worth being invested, acknowledgement of the risk being assumed, relationships to and affiliation with investment professionals capable of providing guidance/advice, and sponsorship/vouching from existing accredited investors.

Anything short of such a change would be a failure of the SEC to apply basic common sense to policy. Worse yet, preserving the status quo would only serve to compound the wealth divide in this country by preserving the exclusive ability of already wealthy individuals to fully diversify their portfolio with riskier investments that are able to produce the outsized returns necessary to generate real wealth (vice the meager, subsistence based returns offered by traditional equity markets).