3 posts categorized "May 2014"

If it ain't broke, don't fix it

Incredibly, there are interest groups in the US who are taking advantage of a provision in Dodd-Frank to try to throttle angel investing.

CaptureFor context, see this excellent press release put out today by the Angel Capital Association.

Here's the money quote:

“'We appreciate the importance of regulation to protect investors from fraud, however regulations need to be focused in areas with a proven need for added oversight.  The angel investment asset class has experienced very little fraud, because angel investors have strong processes for due diligence and investment terms, and ongoing entrepreneurial support,' said Marianne Hudson, ACA’s executive director."

As the SEC revisits the accredited investor definition, there should also be opportunity to bring some non-financial criteria to the definition, hopefully as alternatives to the income and net worth thresholds. But the financial criteria have, in effect, over time, been permitting more and more citizens to qualify as accredited. This is democractic and investor protection has not suffered. Arguably, investor protection has improved because of the expansion of angel investing.

Photo: "Banksy Bullet Proof Angel in Great Eastern Street London," Cyberslayer / Flickr.

David Rose's new book on angel investing

Just got David Rose's new book in the mail, on angel investing.

Definitely looks like it's worth checking out.

Those of us who hang out a fair bit on blogs and online will be familiar with many of David's precepts, from his long, detailed and popular answers on the topic on Quora.

But this book looks like a great way to organize his philosophy on angel investing in one place.

The angel lawyer in me is first drawn - naturally - to a deal form bank at the back, where there is what looks like a term sheet for a light preferred stock offering that combines the NVCA model forms with Ted Wang's Series Seed.

But, bigger picture, the book should be valuable for insights into David's practices as an angel. Chapter titles include "why everyone with six figures to invest should consider angel investing" and"why every angel needs to invest in at least 20 companies."

The first time I encountered how opinionated and direct David could be was when serving on a panel with him at a talk at an accelerator in DUMBO a couple years ago. The topic was crowdfunding, and David was confident that the right structure for non-accredited crowdfunding deals was revenue loans.

And sure enough, there is a revenue loan term sheet in this book! (But I'm swinging back again to being a lawyer.)

David Rose's new book on angel investing

Title III Do-Over

It is an absolutely glorious, summerlike morning in Seattle.

I'm walking to work, listening to a webcast of a hearing of the House Financial Services Committee, which is considering draft legislation to fix things not working with the JOBS Act (both the text of the original legislation, and the implementation of it).

6a01156e3d83cb970c01a3fcfe88cc970b-580wiIt's very gratifying to hear Representative Patrick McHenry openly admit that Title III was a failure from the get-go, and that the fault lies with Congress, not the SEC's prospective implementation. (Title II and the rulemaking surrounding new Form D filing requirements is a different story.)

Gratifying, but not surprising. Rep. McHenry made similar statements at the ACA Summit in Washington DC in March of this year.

State securities administrators are going to be heard on the non-accredited crowdfunding issue. Bill Beatty, the state securities administrator for Washington State, should be speaking at this hearing shortly.

With respect all sides, I think my Individual Crowdfunding Account concept may be part of a holistic, national solution.

When I get to a desktop, I will add links to relevant prior posts on that topic, just below.

Update; links on McHenry Do-Over / Individual Crowdfunding Accounts:

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