Dodd’s Financial Reform Bill for Entrepreneurs

Thursday, April 22, 2010 | Written by Erik Rostad
Posted under: Angels, Financial Concerns, Government | Tags: angel investors, chris dodd, financial reform bill, start-ups | 4 Comments
This morning’s Wall Street Journal described the impact Senator Chris Dodd’s financial reform bill will have on Angel Investing if it gets passed as it currently stands. Remember that Angel Investors are those who fill the financing needs between the Friends & Family stage and raising capital through banks or venture capital. They fill a very important role in the world of start up companies.

Here is a list of how the proposed bill will negatively affect entrepreneurs and start-ups:

The bill proposes to raise minimum net worth & income levels for Angel investors. Right now, Angel Investors must have a total net worth of $1 million and have income of $250k a year in order to invest in a start up. This bill proposes to raise those levels to $2.3 million net worth, $450k income. This would effectively eliminate 77% of current angel investors.
The bill proposes a requirement that start-ups file with the Securities & Exchange Commission (SEC) if they are seeking Angel Investment. The SEC will then conduct a 120-day review of the start-up I guess to determine if they need the funds. 120 Days! 4 months! In 4 months, other countries will have started the business and deemed the new US start-up useless.
As the WSJ states, this proposed bill also seeks to change the rules for a federal pre-emption for state regulation. Under the proposed bill, start-ups would be subject to state regulations from the 50 different states. Right now, start-ups & investors are not subject to 50 different state regulators. This would likely lead to more cost & risk for the start-up.
We’ll keep an eye on this proposed bill and see if any of these items are removed before the bill proceeds. We sure hope so for the sake of USA start-ups.

Related posts:

Update: Chris Dodd’s Financial Bill
Reform the VCs?
Government Regulations Worse than Recession
Angel Investor Tax Credit Georgia – Faculty Chris Hanks Testifies to Georgia Legislature
Angel Investing for the Musician
Posted under: Angels, Financial Concerns, Government | Tags: angel investors, chris dodd, financial reform bill, start-ups | 4 Comments

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4 COMMENTS
Comments The Rich Continue To Use Government To Cut Out Competition « LewRockwell.com Blog | Tuesday, 04 May 2010 at 2:04 pm
[…] to invest in these “riskier” VC investments. Bankster puppet Sen. Chris Dodd (D-CT) has inserted into the upcoming financial “reform” bill a clause that would more than double the […]

Comments Venture Capital To Be Regulated By Financial Reform Bill | LILA RAJIVA: The Mind-Body Politic | Tuesday, 04 May 2010 at 5:11 pm
[…] allowed to invest in these “riskier” VC investments. Bankster puppet Sen. Chris Dodd (D-CT) has inserted into the upcoming financial “reform” bill a clause that would more than double the minimum net […]

Comments ReasonAndJest.com » How Chris Dodd and the Minimum Wage Protect Established Businesses and Restrict Start-Ups | Tuesday, 04 May 2010 at 5:47 pm
[…] allowed to invest in these “riskier” VC investments. Bankster puppet Sen. Chris Dodd (D-CT) has inserted into the upcoming financial “reform” bill a clause that would more than double the minimum net […]

Comments Samatha Heister | Friday, 19 November 2010 at 3:55 am
Thank you for your great article! It has been extremely helpful. I hope that you will continue sharing your wisdom with us.