The government is against the entrepreneur! As much as I hate to politicize my blogs, this one can't go unnoticed! Senator Christopher Dodd's 1,400 page financial reform bill contains provisions for business start ups to raise capital that are so onerous that makes it nearly impossible. How?
Currently, "angel" investors that typically invest in these entities need to be accredited, or, have a net worth thresholds of $1,000,000 or yearly income of $250,000. Angels perform a huge service to the business community as many start ups are too small for the venture capital markets or lack the collateral for bank loans.
Under the esteemed Senator's proposal, these requirements would be raised to $2,300,000 of net worth and $450,000 of income. According to the Angel Capital Association, this effectively disqualifies 77% of the accredited investors! With a 9.7% jobless rate, it would appear the current regime would do everything to reduce that number as these start ups contribute to nearly 10% of all new jobs created.
The "final nail in the coffin" is the fact that the filings with the Securities and Exchange Commission would now endure a 120 day review. To my knowledge, companies need access to capital immediately, not four months down the road, and, investors want the clock to start on getting a potential return once they write the check.
It's hard to understand these motives and instead of the bail outs, how about job creation at the grass roots level and let investment in, rather than discouraging the American entrepreneurial spirit!
Thanks Washington for another card well played!