Top of Mind's 5 Must-Read Articles in Entrepreneurship
Angel funding hit the news last week in a big way with the Angel Capital Association launching its "Protect Angel Funding" campaign. This professional and trade association supports the success of angel investors in high-growth, early-stage companies. It launched the campaign in an effort to keep startups from losing this source of funding if the Securities and Exchange Commission (SEC) increases the financial qualifications for accredited investors.
The ACA initiative is meant to light a fire within the startup world to encourage regulators to keep the definition of who qualifies as an accredited angel investor as is. As an investment group that provided funding to nearly 71,000 early-stage companies last year (VCs typically invest in about 3,000 companies per year to give you some context), the ACA rightfully claims that messing with the definition will hamper entrepreneurs' abilities to start companies and create jobs. It is believed that if the impending changes to the definition take place, nearly 60 percent of angel investors would be eliminated.
It's all in response to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Act requires the SEC to review the definition of an accredited investor this year to determine whether it should be modified “for the protection of investors, in the public interest and in light of the economy.” Right now, the definition of an individual accredited investor is someone with $1 million in net worth or an annual income of $200,000, but the SEC is considering whether or not to raise these financial thresholds to a new net worth requirement of $2.5 million and an annual income requirement of $450,000.
Here’s my two cents on the topic: Leave the definition alone. Accredited investors put themselves in their own financial position. Therefore, they should continue to protect their own assets, weighing the financial risks and rewards. Raising the income bar will take away an investment option that could not only generate an ROI, but could return dividends to our economy. Why would we want to remove that option from their portfolio? Are we also inhibiting that same 60 percent who would no longer qualify as accredited angel investors from investing in the riskiest of stock options? Angels have made the choice of investing in riskier situations. Do we have to baby them with regulations?
Instead of looking at ways to “protect” the investors, let’s try protecting the entrepreneurs who put their entire life’s savings into their startups. Let’s look for ways to ease their risks as they leave behind stable jobs and venture out on their own to start the very companies that will create jobs for our children.
Who is really benefiting from this proposed change? Either side? The success of the entrepreneur needs to drive each group’s thought process and actions. Entrepreneurs have and will continue to keep our economy going. The question is: will the SEC make it harder for them to do so with this proposed change?
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Angel Capital Association Takes Action to Avoid Threat to Startup Funding
This article has a great recap of the angel funding issue. It highlights a few specifics on the Angel Capital Association’s “Protect Angel Funding” initiative and cites sources claiming that if the definition were to change, nearly 60% of current angels would be knocked out.
Why There Are Great Opportunities For Women In Tech
There is a shortage of talent, people and specifically women in the tech space. This means that there is a big opportunity that will start with high paying salaries as well as available jobs. In 2013, it was reported that U.S. tech companies employed an average of 12.33% women engineers. The biggest question is why are women not going after tech jobs? Harvey Mudd’s President, Maria Klawe researched this and found there were three reasons.
The State of Global Crowdfunding
This report tracked and analyzed a little over 75,000 Crowdfunds around the world. Some of the more important stats for Q1 of 2014 included the incredible growth of rewards- and equity-based crowdfunding.
Cairo’s Flat6Labs Plans to Accelerate UAE Startups
Cairo’s Flat6Labs is a small startup accelerator that recently has gained traction across the Middle East by entrepreneurs. So far the accelerator has invested as well as mentored 57 startups. It is expected to expand into Jeddah. Flat6Labs will offer $30,000-$50,000 for a 15% stake in the startup. The accelerator is focused in particular on digital content, e-commerce and mobile apps.
13 Business Productivity Apps for the Real-World Entrepreneur
This was a fun list of apps that can help with productivity and marketing for any entrepreneur. It included everything from apps to organize tasks to places to store articles and videos.