Monday, May 17, 2010

Financial Reform Bill Threatens Small Business Finance

Part of the proposed financial reform bill contains provisions that may have a dramatic effect on the ability of entrepreneurial companies to raise money. Among the proposals:
• "Accredited investors" — Require investors to have a minimum net worth of $2.3 million or annual income of $450,000 — up from $1 million or $250,000.

• SEC registration — Require start-ups to register with the Securities and Exchange Commission and be reviewed for 120 days before raising any money.

• State control — Eliminate the federal waiver and allow states to regulate these private offerings.
Bob Litan and Scott Shane express concerns.

1 comment:

  1. It sounds like a handoff to Goldman sachs and other large, powerful firms who want to get involved in VC and prevent small newcomers and angel investors from getting involved.

    It also protects established tech companies at the expensive of startups. Its some of the worst parts of the bill, and by themselves they warrant a filibuster.