First, let's kill all the angels: Congress takes aim.
philstockworld.com
First, let's kill all the angels: Congress takes aim.
1–10 of 42 posts
Re: First, let's kill all the angels: Congress takes aim.
#2Worst...written...article...EVER! This is the point (found 2 pages or 954 words down the article)
"There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own.
"First, Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an "accredited investor" who can invest in startups - if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states."
He also makes the point that registering with the SEC is expensive ($100,000+ in legal fees) and that he believes the "accredited investor" limits will be raised even further. The rest of the piece is just filler.
(for anyone down voting this let me point out this article goes on for 9 printed pages and doesn't even explain who benefits from these clauses. That's just bad writing)
Re: First, let's kill all the angels: Congress takes aim.
#3Worst...written...article...EVER! This is the point (found 2 pages or 954 words down the article) "There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own. "First, Dodd’s bill would requir…
So umm.. who wins if these limits are successfully put in place?
Re: First, let's kill all the angels: Congress takes aim.
#4Worst...written...article...EVER! This is the point (found 2 pages or 954 words down the article) "There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own. "First, Dodd’s bill would requir…
So umm.. who wins if these limits are successfully put in place?
Something like this: http://www.me-vc.com
Re: First, let's kill all the angels: Congress takes aim.
#5Earlier quoted context omitted.
So umm.. who wins if these limits are successfully put in place?
Something like this: http://www.me-vc.com
I'm sure that company will too but on a larger scale I think Banks win. Angel Investors compete with small business loans and generally win since small business loans require you start paying them back right away where as angel investors just take a piece of the company. So if Angel investments become prohibitive it will force wannabe entrepreneurs into the waiting arms of the banks.
Re: First, let's kill all the angels: Congress takes aim.
#6I am naive on this issue, and I am going to assume good faith on the part of Congress for a moment. Presumably they are trying to protect someone - whom? It seems to me that angel investors were not the ones devastated by the subprime mortgage and banking crises. This appears to be a fix in search of a problem.
Re: First, let's kill all the angels: Congress takes aim.
#7Earlier quoted context omitted.
Something like this: http://www.me-vc.com
I'm sure that company will too but on a larger scale I think Banks win. Angel Investors compete with small business loans and generally win since small business loans require you start paying them back right away where as angel investors just take a piece of the company. So if Angel investments become prohibitive it will force wannabe entrepreneurs into the waiting arms of the banks.
Angel investors do not typically compete with small business loans because these companies would not in a million years get money from a bank.
Angels invest exactly in those that can not get money from banks because they are too high risk.
Once a business is established and has a balance sheet with some assets on it you can start thinking about applying for a regular loan. For small businesses at the 'start-up' level it would be great if they had access to bank loans for their needs, since borrowing from a bank is much cheaper long run than from an angel (after all, the bank does not take equity, only interest).
Has anybody here ever gotten money from a bank based on a non-existent business?
Re: First, let's kill all the angels: Congress takes aim.
#8Earlier quoted context omitted.
I'm sure that company will too but on a larger scale I think Banks win. Angel Investors compete with small business loans and generally win since small business loans require you start paying them back right away where as angel investors just take a piece of the company. So if Angel investments become prohibitive it will force wannabe entrepreneurs into the waiting arms of the banks.
Angel investors do not typically compete with small business loans because these companies would not in a million years get money from a bank. Angels invest exactly in those that can not get money from banks because they are too high risk. Once a business is established and has a balance sheet with some assets on it you can start thinking about applying for a regular loan. For small businesses at the 'start-up' level…
I'm sorry but you're just wrong here.
This is the first link that comes up on Google when you search for "Small Business Loan": http://www.merchantloans.com/. The first item listed under that heading is "Start/buy a business or franchise"
This About.com article (http://sbinfocanada.about.com/cs/financing/a/getbusinessloan...) starts by saying...
"Sooner or later most small businesses need to get a small business loan, whether to get the operating capital for business startup or to finance an expansion. "
Small Business Loans are the #1 way that people start businesses in this country (no one Angel invests in a hot dog stand)
Re: First, let's kill all the angels: Congress takes aim.
#9Worst...written...article...EVER! This is the point (found 2 pages or 954 words down the article) "There are three changes that should have a particular effect on angel investors, a catch-all category which includes everyone from friends and family members who invest in a startup, to unaffiliated wealthy individuals, to side investments made by venture capitalists acting on their own. "First, Dodd’s bill would requir…
Yeah, I read a solid 2 pages of hyperbolic claims about how "devastating" this will be and how important angels are and how they're great and everything before I gave up on learning any actual facts and clicked back here. Thanks for the summary.
How does the bill define "startups", for one? I'm perfectly capable of believing there will be regulations which have adverse unintended consequences on startups from this bill but that sounds extremely onerous -- is that for IPOs, only? I'd actually agree with that. If it's for raising seed money or anything up through a series C, I'd disagree, very strongly in the case of earlier rounds. The article doesn't tell us which it is, though.
Re: First, let's kill all the angels: Congress takes aim.
#10I want to know who, by name or agency, thinks raising the 'accredited investor' thresholds is a good or necessary step.
Accredited investors aren't asking for this change. The participation of private investors (of any net worth) in regular equities was a non-factor in current financial troubles, or indeed any financial troubles of recent decades.
If lessons from the recent crisis are what's motivating new net worth requirements on investments, how about new rules to block submillionaires from buying homes? That's be more rational as a reaction to the mortgage bubble than blocking millionaires from investing in companies!
(I don't expect even lame-duck Dodd to tell average Americans they're too easily duped to own homes; we should be equally outraged he wants to tell millionaires they're too easily duped to make private equity investments.)