Right now, the SEC is considering raising the accredited investor definition from $1M+ net worth to $10M+.
As is, just 10% of Americans qualify as accredited. This increase would make startup investing the exclusive domain of the 1%.
We should be going in the other direction, ending accredited investor restrictions so 100% of Americans are allowed to invest in startups!
This doesn't mean that 100% of Americans can or should invest their money in startups. But at least it will be legal for them to do so.
Using income or wealth to restrict accreditation causes biases in the funding market. Less than 1% of 18-34 year olds are accredited. Only 1.3% of African Americans are accredited. These biases affect which founders get funded.
Open access to startup funding enables truly open crowdfunding. This will lead to more startups being created, and more types of founders getting funded. This is all a huge positive gain for society, and can build wealth for Americans who never had access to this asset class.
If we really believe in the power of founding and investing in startups, we should let everyone do it!
As is, just 10% of Americans qualify as accredited. This increase would make startup investing the exclusive domain of the 1%.
We should be going in the other direction, ending accredited investor restrictions so 100% of Americans are allowed to invest in startups!
This doesn't mean that 100% of Americans can or should invest their money in startups. But at least it will be legal for them to do so.
Using income or wealth to restrict accreditation causes biases in the funding market. Less than 1% of 18-34 year olds are accredited. Only 1.3% of African Americans are accredited. These biases affect which founders get funded.
Open access to startup funding enables truly open crowdfunding. This will lead to more startups being created, and more types of founders getting funded. This is all a huge positive gain for society, and can build wealth for Americans who never had access to this asset class.
If we really believe in the power of founding and investing in startups, we should let everyone do it!