An article we liked from Thought Leader JD Alois:

Angel Capital Association Provides Compelling Information to Broaden Definition of an Accredited Investor, Countering SEC’s Ambition to Exclude More Investors

During the Securities and Exchange Commission’s meeting of the Investor Advisory Committee (IAC) yesterday (September 21, 2023), a representative from the Angel Capital Association (ACA) gave a compelling presentation advocating on behalf of his industry and why we need more Accredited Investors and NOT fewer.

The remarks were delivered by ACA CEO Patrick Gouhin.

Currently, under the direction of SEC Chairman Gary Gensler, the Commission is preparing new rules that will make the definition of an Accredited Investor more stringent, reducing the number of people who qualify to invest in Reg D securities offerings. While the Commission has not presented sufficient evidence that a high percentage of current Accredited Investors are being harmed by fraud in these private offerings, the policy shift adheres to the current leadership’s belief that investors must be protected from themselves.

Today, the ACA represents more than 16,000 Accredited Investors in 250 Angel Groups. These thousands of investors commit almost $1 billion annually into early-stage firms and report “no fraud to speak of.”

An Angel investor provides capital during early-stage funding rounds, typically a Seed round to Series A. However, these investors can continue to participate in backing a private firm as it matures. Angel investors accept the risk intrinsic to supporting startups and younger firms. This is how a market economy functions and some of these firms will eventually become successful, while most will fail.

Risk capital is vital for economic growth, innovation, and wealth creation. Private investors are the foundation for the US economy – the most robust and innovative in the world. The ACA provided an example of one of its Angel Groups – Desert Angels – who reviewed its performance over a ten-year period, having invested $47 million.

To reference the presentation:

• For every $1 million invested by Desert Angels, 58 new jobs were created.
• $4.58 million in wages were generated.
• Each million dollars drove $21 million in economic output.

The ACA declares that increasing the Accredited Investor thresholds would hinder capital formation AND halt and reverse the gains in gaining more diversity into the investor class. The group states that...

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