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