Techpreneurship, with Jeff Amerine
(Jeff Amerine is an IA advisor, entrepreneurship educator, and officer with the University of Arkansas Technology Licensing Office. Each Thursday, his Techpreneurship blog will appear in INOV8. Drop him a line in comments.)
Does anybody out there believe successfully creating a new venture is easy? Have any of you been blown away by too much investment funding falling from the sky to make your journey across the valley of death, just so much easier? I didn’t think so. Most of us with a lick of common sense realize that raising capital for a new venture in the best of times equals significant pain and suffering.
So imagine how difficult the picture would become for start-ups, if under the guise of “consumer protection”, the Finance Reform Bill offered by Senator Dodd more than doubled the requirements to be an accredited investor!
The proposed language would allow the SEC to establish a moving target for accreditation, which is a terrible idea. Angel investors and entrepreneurs need a consistent set of rules. Even worse, the bill proposes to adjust for inflation since the original rule was set in 1970. The minimum the requirement would go from $1 million in net worth or an annual salary of $200,000 to $2.3 million in net worth or $460,000 in annual salary!!
So let’s all take a moment to reflect on this. How many new angel funds will not be able to come together should these new rules be enacted? How many new businesses will fail from undercapitalization? How many new jobs will never happen? I have to say the idea that the government needs to “protect” anybody making $200,000 per year or with a net worth of over $1 million from investing their own money as they see fit, is beyond insanity. Frankly, the idea the government can dictate to any interested, informed investor that they aren’t “accredited” to invest their own money as they see fit, really, really rubs me the wrong way.
And yet, the government clearly plans to increase the tax burden on this group of “wealthy Americans” to pay for all the other fantastic programs rolling out of Congress. So let me get this straight. This group of Americans (soon to be formerly “accredited”) is not savvy enough to invest their own money as they see fit to create new ventures, which in turn creates lots of new jobs (hey and maybe even new tax revenues!!). But the autonomic Congressional bureacrats that suggested this particular idea are completely competent to make much better use of the money… Really?
Folks the logic just doesn’t work for me. I would encourage you all to read the detailed analysis of this issue at the link below:
Once you do that, and you regain your composure, please let the Arkansas Congressional delegation know how you feel. Finance reform to fix the real issues that caused some of the economic woes of the past few years has merit. Finance reform to limit angel investment in early stage ventures had to be created by a group of people that have never created a business, never created a private sector job, and have never walked in a struggling techpreneur’s shoes..
In view of all of this, I had some ideas of my own. See what you think.
1. To be in Congress or on a Congressional staff, you have to pass an IQ test, that we the people plan to adjust upward each year.
2. To be in Congress or on a Congressional staff, you have to pass a free market capitalism economics literacy test. This will be an annual requirement and the minimum passing score will be 90%.
If you don’t pass either of these, you can’t run for office. So I’m being silly, I know, but we need people to begin to exercise some common sense in D.C.
What are they going to suggest next?
“You can’t spend or invest any money unless you can provide proof of adequate disposable income, and you have government approval”. “Oh, and be sure to have your last three years tax returns in your back pocket or you can forget going to the casino….”
Techpreneurs, what say you?