E111: The Expanding Access to Capital Act of 2023 (HB2799) is recently passed US House of Representative legislation that would substantially change how startup investing works in the US. It would change the basic definition of an accredited investor, change how both small and large startup funds operate and lower regulatory burdens. The stated goal is to increase available capital for startups while lowering the barriers to entry for small investors so as to democratize startup investing. Startup investing is mostly the domain of wealthy accredited investors while non-accredited investors can only participate via crowdfunding at much higher investor cost. Co-hosts David & Paul discuss this legislation, the many effects that might be expected and the potential for passage into law. We think it will be modified in the Senate to address some peripheral Democratic political concerns around gig labor and investor risk but don't see these a deal breakers. However, the upcoming 2024 election cycle is likely to delay a deal until after the election. For some context, on December 21, 2011, the SEC adopted amendments to the definition of accredited investors, requiring that the value of a person’s primary residence be excluded when determining whether the person qualifies as an “accredited investor” based on having a net worth in excess of $1 million. According to a report by the Angel Capital Association, the regulation change is estimated to have eliminated more than 20% of previously eligible households in the United States. Check out this study of the impact of investor protection regulation changes from 2011. (recorded 3/12/24)
Follow David on LinkedIn or reach out to David on Twitter/X @DGRollingSouth for comments. We invite your feedback and suggestions at ventureinthesouth.com or email david@ventureinthesouth.com. Learn more about RollingSouth at rollingsouth.vc or email david@rollingsouth.vc. Follow Paul on LinkedIn. Download our White Papers and Cheat Sheets HERE. Thanks for listening and remember: Our mission is to MAKE MONEY, HAVE FUN AND DO GOOD.
E111: The Expanding Access to Capital Act of 2023 (HB2799) is recently passed US House of Representative legislation that would substantially change how startup investing works in the US. It would change the basic definition of an accredited investor, change how both small and large startup funds operate and lower regulatory burdens. The stated goal is to increase available capital for startups while lowering the barriers to entry for small investors so as to democratize startup investing. Startup investing is mostly the domain of wealthy accredited investors while non-accredited investors can only participate via crowdfunding at much higher investor cost. Co-hosts David & Paul discuss this legislation, the many effects that might be expected and the potential for passage into law. We think it will be modified in the Senate to address some peripheral Democratic political concerns around gig labor and investor risk but don't see these a deal breakers. However, the upcoming 2024 election cycle is likely to delay a deal until after the election. For some context, on December 21, 2011, the SEC adopted amendments to the definition of accredited investors, requiring that the value of a person’s primary residence be excluded when determining whether the person qualifies as an “accredited investor” based on having a net worth in excess of $1 million. According to a report by the Angel Capital Association, the regulation change is estimated to have eliminated more than 20% of previously eligible households in the United States. Check out this study of the impact of investor protection regulation changes from 2011. (recorded 3/12/24)
Follow David on LinkedIn or reach out to David on Twitter/X @DGRollingSouth for comments. We invite your feedback and suggestions at ventureinthesouth.com or email david@ventureinthesouth.com. Learn more about RollingSouth at rollingsouth.vc or email david@rollingsouth.vc. Follow Paul on LinkedIn. Download our White Papers and Cheat Sheets HERE. Thanks for listening and remember: Our mission is to MAKE MONEY, HAVE FUN AND DO GOOD.