Act Now: Protect Angel Startup Funding

Do you believe in preserving the health of early-stage companies and their role in job creation? Then join the Angel Capital Association campaign to "Protect Angel Funding".

One Simple Objective: Protect angel startup funding and the startup economy by urging regulators to preserve financial thresholds in the current accredited investor definition. Download your template and add your changes or additional information: 

One Easy Step to Submit to SEC: Your letter can be attached or copied into a special SEC page:

Help the Cause: We’ve made it even easier to spread the word and ask others to join in: Letter to friends and associates (PDF)

Angels Support Startups and Job Creation

  • In 2013, accredited angel investors put $24.8 billion into nearly 71,000 early-stage companies*
  • Potential suggested changes to the Accredited Investor definition could eliminate 60 percent of those who currently qualify
  • A survey of ACA members in January found that more than 25% of its 12,000 plus members – who are among the most active angel investors in the country -- would lose accredited investor status if net worth and income thresholds were inflation-adjusted 
  • The loss of accredited investors in areas outside of New York, Boston and California would be greater - one-third of ACA Members in those areas would no longer qualify.

*according to estimates by the Center for Venture Research at the University of New Hampshire

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Learn More:

ACA Press Release: Protect Angel Funding
Background: Accredited Investor Definition
ACA Comment Letter: to the SEC, February 2014
ACA Comment Letter: to the SEC, October 2014
All Comment Letters: to the SEC
PPT Toolkit: Slides to present to angel groups and other meetings (PDF)
Webinar: Protect Angel Startup Funding: Important Public Policy Update
Interview of ACA Executive Director on Compassionate Capitalist Radio Show:  Follow up to Protect Angel Funding Webinar
SeedInvest Comment Letter to the SEC
Ewing Marion Kauffman Foundation Comment Letter to the SEC
Representative Mark Amodei Comment Letter to the SEC
Representative Charles W. Boustany Comment Letter to the SEC
Representative Cedric Richmond Comment Letter to the SEC
 

Why the Accredited Investor Definition Matters

The SEC was charged with setting detailed rules on accredited investor standards following the "Dodd-Frank Act". The complicated law included a section that changed the net worth requirement for accredited investors - the standard for net worth remained at $1 million, but eliminated a person's primary residence from the calculation of net worth.

The legislation also requires the SEC to study the definitions every four years, which next happens after July, 2014.  Congress asked the SEC to conduct the study "for the protection of investors, in the public interest and in light of the economy."  There is pressure from some organizations to raise the thresholds for income and net worth again for inflation (increasing net worth from $1 million to about $2.5 million, and increasing annual income from $200,000 to about $450,000 for individuals).  Such an increase would reduce the number of accredited investors by about 60 percent, per information from the SEC and General Accounting Office.

ACA's Advocacy Work: ACA has been active in 2013 and 2014 in educating the SEC on the importance of not raising the financial thresholds for accredited investor definition.  In addition to its work directly on Dodd-Frank legislation in 2010, one of the rules ACA weighed in to the SEC on was how "under water" mortgages on primary residences would be calculated. Additional insights and implications are detailed below:

Consistent Regulation is Key

A critical part of the ACA policy platform is to maintain standards and regulations for accredited investors and the federal rules for investing in startups.

Since 2012, ACA has been active in a few important activities that have or could impact angel investment and accredited investor status:

JOBS Act Rulemaking by the Securities Exchange Commission
The Jumpstart Our Business Startup Act (JOBS Act) was passed by Congress in 2012 to increase capital available to startups and provide an easier regulatory path for growing companies for successful exits. Read on for additional information, including:

Accredited Investor Definitions set by the Securities Exchange Commission
The SEC was charged with setting detailed rules on accredited investor standards following the "Dodd-Frank Act". The complicated law included a section that changed the net worth requirement for accredited investors - the standard for net worth remained at $1 million, but eliminated a person's primary residence from the calculation of net worth. Read on for additional information, including:

  • ACA's letters to the SEC
  • ACA's questionnaire to the SEC

Dodd-Frank Wall Street Reform and Consumer Protection Act
This large 2010 bill covered a wide range of financial reform issues, over more than 800 pages. The original bill included two sections that would have reduced the number of accredited angel investors and create regulations that would have made raising angel capital more complicated and costly for entrepreneurs. Read on for more information, including:

  • ACA's writings and work to help amend the bill
  • Implications of the Dodd-Frank Act on angel investors
  • A link to the Dodd-Frank Act