We want to let you know about a recent activity and contribution NASVF has made in supporting amendments to the Financial Stability Act of 2010 proposed by Senator Christopher Dodd (D-CT).
There were two elements of the bill that would have been detrimental to entrepreneurs, public and private investors as well as organizations that support emerging innovation enterprises:
- Section 412 and 413, Adjusting the Accredited Investor Standard for Inflation. As currently written, this section could result in the elimination of as many as two-thirds of all accredited investors who invest directly in start-up and early-stage small businesses.
- Section 926, Authority of State Regulators Over Regulation D Offerings. This section could make it more difficult to raise angel capital from investors in different states, make it unclear what entities regulate angel investments, and introduce potential lengthy waiting periods for businesses to receive their capital, possibly resulting in the death of those businesses.
NASVF along with nine national associations supporting small business and innovation joined together in a letter to Senator Dodd to voice their concerns on the Senate Reform Bill (view the letter).
As a result of these concerns, two amendments to the bill have been initiated. These amendments are the result of the efforts by many members of NASVF and the Angel Capital Association along with the coalition of international innovation associations.
- Section 412: Adjusting the Accredited Investor Standard
The threshold for “accredited investor” would stay the same as they are currently, although the standard for net worth of $1 million would now exclude the investor’s primary residence. While the coalition of associations would have preferred no adjustment to the standard for angel investors, we believe this is a good compromise. - Section 926: Regulation D Offerings
The amendment deletes all previous language and disqualifies individuals who have been determined to be “bad actors” by Federal and State authorities from using Regulation D 506 private offerings.
Although these amendments show important progress, we all need to stay vigilant in making sure these amendments are included into the final version of the legislation. Please let your Senators know the importance of passing these amendments.
The Board and management of NASVF are committed to providing our members and strategic partners with a strong advocacy to advance early stage innovation capital for our industry.
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