Startups rely on "angel" financing to get going. This market is essentially unregulated and therefore very efficient and risky. Partners of my Firm, Openwater Advisors recently assisted in significant Angel raise. The Democrats via Senator Chris "Countrywide is my copilot" Dodd has proposed new legislation that will strangle much of the angel market. To wit:
First, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.
Hope! Change! And Canadian startups galore.
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