Success & Challenges of the angel community: SEC asks ACA CEO Pat Gouhin to advise on capital formation as part of the FinHub’s Peer-2-Peer Series.

By: Pat Gouhin, Chief Executive Officer

May 10, 2022  –Seeking to strengthen connection, advocacy and understanding as well as advise those in the SEC and FinHub community, CEO Pat Gouhin was thrilled to represent angel investors and the angel ecosystem at FinHub’s Peer-to-Peer meet-up on capital formation.

“It was an honor to get to speak directly to the FinHub community and the SEC. It’s so important for angel investors to have the opportunity to talk about those critical issues where policy and progress intersect,” said Pat. 

During the meet up, which included representation from the majority of divisions within the SEC, Gouhin was able to talk about the power of angel investors and the role they play in economic growth, job creation, entrepreneurship and the connection between angel investment and venture capital dollars. 

Pat was able to give SEC representatives a different lens through which they could look at angel investors by speaking directly to them in this meetup format . 

“It’s easy for people to try and find reasons not to help investors, but it’s harder if they see the connection between angels and the entrepreneur. Without angels willing to step up to work with entrepreneurs in so many ways other than just money, there would be tangible differences. It’s about giving back and cultivating thriving ecosystems and pockets of innovation across the country, “ Gouhin said. 

During the meetup, Gouhin also talked about how a high failure rate is not analogous to fraud. The inherent high risk of new management teams, technology still in development and often brand new markets, creates big success but can also result in high rates of failure inherent in startups. This is a very different phenomena than clear abuse and fraud that the SEC is charged with stomping out.

Perhaps most importantly, Gouhin spoke directly to the accredited investor definition and how opening up capital formation in an intentional and educated manner will allow under-represented communities to have an alternative path to entry. 

Also presented at the meetup was the potential of utilizing ACA’s Angel University curriculum, now at nine classes, as one of the measures of sophistication that could be an alternative path to accreditation.  An investor who could demonstrate competence against the curriculum could potentially be exempt from meeting the financial thresholds currently in place.  He also discussed how raising the fund cap to $50 million and 500 investors would help to fill a void in the early stage capital formation space. 

And although not a regulatory matter for the SEC, Gouhin also took the opportunity to talk about the potential elimination or reduction of IRC Section 1202 on Qualified Small Business Stock (QSBS) that has been a legislative target over the past year.  This provision greatly supports founders, the early employees they hire and investors alike.  The program has been successful and has influenced capital formation and investment in early stage startups across the country. 


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Failures and Fraud in Early-Stage Angel Investing by John Harbison  on  September 05