July 19, 2020
While accreditation rules may have had good intentions in the past, they now seem illogical and limit people from participating in a new economy of technology, innovation and wealth creation.
The rules do more harm than good to investors by preventing too many investors from the choice to take risks and instead focusing on the rare situation where someone doesn't understand.
Ideally, these rules should be abolished in FULL, so someone can invest in startups and venture capital just as they can invest in even more risky cryptocurrency, retail stocks, gambling in Las Vegas and the lottery.
The rules prevent people who understand or work in innovation and technology from investing in the core of innovation and technology revolution.
That said, it should be clear to investors any type the level of risks on any type of investment.
Of course, nobody should be investing in startups or venture capital without knowing they could lose their money. That should be made clear to everyone. You could lose it all.
However, because someone has a net worth of XYZ, it doesn't make them better prepared to invest in startups than someone without ANY net worth who may work with startups or venture capital.
If anything, the person with very little or net worth who may work in Silicon Valley with startups or venture capital has a far greater perspective of the risks involved than someone with a large net worth.
IF there must be some criteria to be an accredited investor, it should not be based upon net worth, but some basic acknowledgment of risks.
Credentials and education are not equivalent to understanding risks
Acknowledging risks could be as simple as having a person go through an online survey, providing a written verification or clicking an acceptance of terms that a person understands the risks, no matter what their level of net worth is.
Some people, such as those who work with startups, tech, venture capital funds, angel investing, syndicates, should automatically be considered "accredited." They know the risks more than people with millions of net worth, but if we have to have some type of extra layer of acknowledgment, then everyone should have to acknowledge the same thing.
By keeping criteria related to net worth or income, we limit the potential investor pool rather than a much wider and more diverse pool of people.
Each day we fail to end or modify the accredited investor definition, we are unfairly discriminating against people from having the chance to leverage their understanding of the risks and technology economy.
It's not different than making a black person sit at the back of the bus just because they are black.
I strongly urge the SEC to eliminate the accredited investor definition completely or, if not, create a simple, common sense acknowledgment that applies to everyone equally that involves basic questions and common sense.
This doesn't need to be complicated.
Thank you for considering these changes and let's make them immediately without any delay.
Kelly Wilson