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One of the great job creators in our country is small business and small businesses are often started with capital raised or some investment from a nontraditional funding source.
Tucked away in the comprehensive financial reform bill are provisions that would raise the costs of angel investors and startup ventures.
Under existing law, startup companies can raise money easily and quickly from “accredited investors” - individuals with substantial wealth or income.
There is no need for the companies or investors to gain approval from any state or regulatory office (i.e. these investors invest at their own risk).
Under this proposed bill there is a section that would require companies seeking outside investment from nontraditional sources to make a filing with the Security and Exchange Commission (which would have 120 days to review). This would raise the cost of seeking investors and it would delay the funding process.
There is no evidence to suggest these types of investments played any type of role in the present financial crisis. Therefore, these provisions in this bill would appear to be greatly overreaching and certainly will impact this key factor of capital formation. The result of all this will have a negative impact on job creation.
Am I missing something? I welcome your input on this. Has anyone heard of a situation where these startups and angel investments were part of the problem? Do we need government to regulate this area in order to protect these investors?
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Oh my gosh this could effectively shut down our company. We raise capital from accredited investors to build new hotels - each one of them creates about 35 jobs. There is absolutely no reason for such onerous legislation. Do these guys even know what they're doing?
Posted by: David Hogg | March 31, 2010 at 01:22 PM