The angel investing horror story goes something like this: An entrepreneur publicly solicits seed capital under new securities laws, but accidentally accepts investment from an unaccredited investor. When this violation of JOBS Act rules is discovered, the entire investment round must be rolled back and the money—if there’s any left—returned. It’s the ultimate lose-lose situation.
“Everything shuts down and everyone loses money,” says Yi-Jian Ngo, managing director of the Alliance of Angels, a long-tenured angel group in Seattle.
