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First, let's kill all the angels: Congress takes aim.

philstockworld.com

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Re: First, let's kill all the angels: Congress takes aim.

#31

Post by api »

barnaby wrote: post #12

Duh, big banks would win. Think about it, if they remove competition from the private equity market, then they monopolize capital financing. This revision is nothing more than a monopoly bid.

I wish more people got this. Regulations, especially complex and expensive ones, always favor large incumbents in a market over smaller or newer competitors. Expensive regulatory requirements are a regressive tax within the business world.

The time and complexity is often as bad as the money. Time and complexity is something smaller ventures are incapable of dealing with, while larger ventures can easily just throw their big bureaucratic might at it.

We seem to be rushing headlong toward a kind of Soviet economy in which huge mega-corporations aligned with the state run everything. (Actually, fascism is the proper term for this... but lumbering dinosaurs like the Telcos, GM, etc. are a little more Soviet in their drab outward appearance.)

Re: First, let's kill all the angels: Congress takes aim.

#32

Post by radicaldreamer »

chancho wrote: post #30
InclinedPlane wrote: post #21

Earlier quoted context omitted.

Google uses startups for hiring inflow, I doubt they want to choke them off.

Starving startups of cash makes them easier to buy.

But it also reduces the number/quality of the startups worth buying.

Re: First, let's kill all the angels: Congress takes aim.

#33

Post by azanar »

InclinedPlane wrote: post #21
krf wrote: post #20

Earlier quoted context omitted.

Microsoft, Google, Yahoo, Apple, Oracle and all other large tech corporations benefit if the money to startups is cut off or diminished. Getting rid of potential competition through legislation is a tried and true method.

Google uses startups for hiring inflow, I doubt they want to choke them off.

Google uses startups for hiring inflow, I doubt they want to choke them off.

They do this simply because that is the only way for them to either get the talent of the startup, or get a competitor to start working on their behalf.

If the startup is successful, I doubt the founders would be particularly interested in giving it up without some compensation. If it isn't successful, then it doesn't matter, since Google will be able to recruit them for far less money once the startup is dead.

It is in every company's best interest to pay the people they hire below market rate for their work. The only benefit Google gets from this is that they know the people they recruit through acquisitions are capable of building things. It's a trade-off: is it better to acquire a company, knowing the people aren't losers? Or is it better to avoid having to pay market value, at the risk of picking up a loser every now and again?

Re: First, let's kill all the angels: Congress takes aim.

#34

Post by blasdel »

Please stop repeating the same bullshit that seemingly every VC pundit is repeating about the Dodd bill. The "2.3m" figure is a total fabrication!

The bill does not set new requirements at all. It just explicitly authorizes the SEC to adjust the income & net-worth requirements for inflation. The SEC was already empowered to alter the requirements independently of legislation (since they were not set by legislation), but they've never done so.

The figures quoted are pulled out of their ass — they just took the old figures and adjusted for the last 30 years of inflation since they were set. Nothing in the bill says the SEC has to adjust it all at once or at all.

Re: First, let's kill all the angels: Congress takes aim.

#35

Post by Jdxdiego »

While there is inherit risk involved in angel investing, it has been a fairly straightforward method for increasing one's wealth. It is becoming increasingly clear (to me at least) that this congress and administration are using regulation and governmental control to stifle and limit the production of wealth that cannot be taxed at a high rate. In most cases, an angel investment will be taxed as a capital gain, and usually one that is considered long term at a lower rate.

Re: First, let's kill all the angels: Congress takes aim.

#36

Post by gojomo »

blasdel wrote: post #34

Please stop repeating the same bullshit that seemingly every VC pundit is repeating about the Dodd bill. The "2.3m" figure is a total fabrication! The bill does not set new requirements at all. It just explicitly authorizes the SEC to adjust the income & net-worth requirements for inflation. The SEC was already empowered to alter the requirements independently of legislation (since they were not set by legislation),…

Why would new "explicit authorization" be needed if using that power wasn't foreseen?

These discriminatory thresholds shouldn't be raised one dollar -- they should be reduced, abolished, or replaced with something more respectful of individual circumstance (like a percentage-of-portfolio in private equity or waivers based on experience rather than pure wealth).

Re: First, let's kill all the angels: Congress takes aim.

#37

Post by eli »

Jdxdiego wrote: post #35

While there is inherit risk involved in angel investing, it has been a fairly straightforward method for increasing one's wealth. It is becoming increasingly clear (to me at least) that this congress and administration are using regulation and governmental control to stifle and limit the production of wealth that cannot be taxed at a high rate. In most cases, an angel investment will be taxed as a capital gain, and u…

I'm sorry, but this really sounds like a conspiracy theory. There are much saner ways to raise taxes on the rich -- even if you were inclined to be sneaky about it.

Re: First, let's kill all the angels: Congress takes aim.

#38

Post by Jdxdiego »

eli wrote: post #37
Jdxdiego wrote: post #35

While there is inherit risk involved in angel investing, it has been a fairly straightforward method for increasing one's wealth. It is becoming increasingly clear (to me at least) that this congress and administration are using regulation and governmental control to stifle and limit the production of wealth that cannot be taxed at a high rate. In most cases, an angel investment will be taxed as a capital gain, and u…

I'm sorry, but this really sounds like a conspiracy theory. There are much saner ways to raise taxes on the rich -- even if you were inclined to be sneaky about it.

An example of a saner way?

Re: First, let's kill all the angels: Congress takes aim.

#39

Post by anamax »

blasdel wrote: post #34

Please stop repeating the same bullshit that seemingly every VC pundit is repeating about the Dodd bill. The "2.3m" figure is a total fabrication! The bill does not set new requirements at all. It just explicitly authorizes the SEC to adjust the income & net-worth requirements for inflation. The SEC was already empowered to alter the requirements independently of legislation (since they were not set by legislation),…

> The bill does not set new requirements at all. It just explicitly authorizes the SEC to adjust the income & net-worth requirements for inflation.

Oh really? Let's look at what the relevant section, 412, actually says.

19 SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STAND20 ARD FOR INFLATION.

21 The Commission shall, by rule—

22 (1) increase the financial threshold for an ac23 credited investor, as set forth in the rules of the

24 Commission under the Securities Act of 1933, by

25 calculating an amount that is greater than the

[page break omitted]

1 amount in effect on the date of enactment of this

2 Act of $200,000 income for a natural person (or

3 $300,000 for a couple) and $1,000,000 in assets, as

4 the Commission determines is appropriate and in the

5 public interest, in light of price inflation since those

6 figures were determined; and

7 (2) adjust that threshold not less frequently

8 than once every 5 years, to reflect the percentage in

9 crease in the cost of living.

http://banking.senate.gov/public/_files/AYO09D44_xml.pdf

If you're going to argue that "shall" doesn't mean that the SEC is being told to compute a number and apply it, please provide supporting evidence.

Re: First, let's kill all the angels: Congress takes aim.

#40

Post by anamax »

jbooth wrote: post #9
SamAtt wrote: post #2

Worst...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 bi…

> is that for IPOs, only?

IPOs were "hurt" by Sarbanes Oxley, the reaction to Enron. (No, there's nothing in it that would have affected Enron.)

> 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.

While that article may not have provided every piece of information that you'd like, Google is your friend. Above I quoted the relevant section AND provided a link.

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