Interesting guest post by Scott Kupor of Andreessen Horowitz, on Marc Andreessen's blog, from which I will isolate this quote:
[Through Title III of the JOBS Act,] "we welcome 'the 96%' least-wealthy Americans to invest (via crowdfunding) in the absolute riskiest stage of new company formation—early, seed-stage financings. Somehow, we have concluded that unaccredited investors should be able to likely lose their hard-earned money by investing in the most risky of asset classes. Yet precisely as the risk diminishes dramatically in the subsequent stages of a company’s development, the spoils go only to the wealthy."
The point about non-accredited crowdfunding is clear, though in isolating it from Kupor's post, I've obscured his broader thesis, which moves in the opposite direction: he thinks it is wrong to be excluding the middle class from investing in America's innovation economy.
Now, Kupor's solution is not to lower the accredited investor standard so more members of the American middle-class can invest in the Series B and later rounds of private emerging companies; nor is it to somehow get more Americans involved in secondary trading of private shares. The way to include the investing middle class in the innovation economy, he feels, is to "[shock] the small-cap IPO market back to life." And he suggests some technical means for doing so.
Kupor's perspective is that of a venture capitalist. If you restate his argument in an uncharitable way, he is saying that the solution for the problem of excluding non-accredited investors in value appreciation is not to let them participate in private markets, but instead to suffer them to populate an earlier public market for private investors seeking liquidity.
But I do think he is right about Title III not being the solution to broader participation in startup investing.
Image: Nick D. Clements / Flickr. Thanks to Joe Wallin for the heads up about the Kupor post.