Update to Accredited Investor Definition

The Startup Lawyer

The Dodd-Frank Wall Street Reform and Consumer Protection Act probably won’t fix or prevent anything, but it was successful at modifying a portion of the definition of an accredited investor. ADJUSTING THE ACCREDITED INVESTOR STANDARD. (a) I’ve seen a few subscription docs floating around that don’t account for this recent modification to the accredited investor definition. Tags: Startup Issues accredited investors

Accredited Investors Are Not Necessarily Professional Investors

Mark Birch

Working with angel investors is another story completely. Until Congress deems otherwise (aka JOBS Act ), a person has to be an accredited investor in order to invest in private companies. These potential angel investors run the gamut of financial professionals, general contractors, small business owners, serial tech entrepreneurs, lawyers, celebrities, and the like. This is not always the case in the angel investor crowd however.

Startup Fundraising: Friends, Family, And Accredited Investors

Early Growth Financial Services

When it comes to startups’ earliest funding sources, beyond founders’ personal liquidity (or debt capacity) friends and family are usually the first places founders turn to for help getting their startups going. But there are significant risks to tapping those close to you for funds. And I’m not just talking about the obvious possibility of emotions becoming wrapped up in funding decisions or the potential negative impacts to your personal relationships.

Will the most successful crowdfunding portals be restricted to accredited investors?

Gust

4) Accredited Investor funding portals, which may or may not register under the JOBS Act, but will restrict themselves to the exempt, upper part of the market. This is an interesting question, and one to which no one really has an answer yet. To some extent it will depend on what the SEC decides to do with the regulations surrounding the whole subject, which they have until the end of the year to write.

What is an accredited investor?

Startup Company Lawyer

For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as “accredited investors&# defined in rule 501 of Regulation D. Offerings to accredited investors are exempt from the registration requirements on the theory that accredited investors are sophisticated enough to protect their own interests. Thus, many homeowners are accredited investors due to the value of their houses.

Are there any crowd funding options for tech start-ups not tied to just supporting projects?

Gust

At the moment, this is primarily limited to raising money from very rich people who qualify as Accredited Investors , and with whom you already have a pre-existing relationship. So in the meantime, while there are a very few sites (such as CircleUp for Accredited Investors, and Bolstr for non-Accrediteds) that have begun to gingerly start operations under existing laws, I’m afraid it’s likely to be several months before crowdfunding truly gets going.

New Accredited Investor Net Worth Test to Impact Private Investment

Recent Buzzes - VC Experts, Inc.

In the Dodd-Frank Act passed last year, Congress required that an individual's primary residence be excluded from the $1million net worth test for accredited investor status. The new net worth test will undoubtedly reduce the pool of prospective accredited investors, have a negative impact on companies' prospects for raising capital and will require companies to review and make changes to their offering documents to conform to the new rules

Dodd-Frank Bill Signed by Obama: Aspects of Individual Accredited Investor Tests Altered

VC Deal Lawyer

As you may recall from my previous post on this issue, much concern surrounded this Act because of the proposed changes to the “accredited investor&# qualifiers for individuals. no limit on number of accredited investors, no dollar limit, minimal disclosures), one can surmise that how we define “accredited investor&# is an important concept. Tags: Angel Investors Legislation Raising Capital On July 15, 2010, the U.S.

Dodd-Frank Act Affects Private Placements by Raising the Bar for Individual Accredited Investors

Recent Buzzes - VC Experts, Inc.

With the enactment of the Dodd-Frank Act on July 21, 2010, the "net worth" standard for an "accredited investor" under Regulation D has been adjusted, effective immediately, to specifically exclude. the value of a primary residence from an investor's net worth determination under Rule 501(a)(5) of the SEC's private placement safe harbor in Regulation D. For individuals to qualify as "accredited investors," they must satisfy either income or net worth standards.

Legal Checklist for Startups

Scott Edward Walker

Only raise funds from “accredited investors” (see post here ) and don’t pay anyone a commission for raising funds for you unless they are a registered broker-dealer (see post here ).

Fundraising 101: Checklist for Entrepreneurs

Scott Edward Walker

Do your homework and determine which investors are the right fit for your startup (see post here ). Hustle and build relationships in order to get warm introductions to those investors (see post here ).

House Passes Crowdfunding Bill: FAQ’s for Entrepreneurs

Scott Edward Walker

Third, startups will likely have difficulty raising funds from VC’s and other sophisticated investors if they have hundreds of unsophisticated stockholders. Last week, the U.S.

Raising Capital? 3 Tips for Entrepreneurs

Scott Edward Walker

Fundraising Tips Tip #1: Only Offer and/or Sell Securities to “Accredited Investors”. The rule of thumb in connection with private placements is only to offer and sell securities to “accredited investors” under SEC Rule 506. Tips #3: Diligence the Investors.

How To Launch a Startup and Avoid Ending-up in Jail

Scott Edward Walker

Startup Issues accredited investors Chris Dixon finders illegal immigrants independent contractor IP assignment minimum wage misclassifying employee payroll taxes privacy laws sales taxes securities laws startup startups vesting

Convertible Note Seed Financings: Founders Beware!

Scott Edward Walker

Obviously, this is not very appealing to sophisticated investors because their return on a high-risk investment would only be the interest on the loan, which (as discussed in part 2 ) is typically 5%-7% annually. 2) Conversion Right (Investor-Friendly). 1) Accredited Investors.

Walker Twitter Highlights: December 19th – January 1st

Scott Edward Walker

rJgnV1 The SEC’s final rule re NET WORTH STANDARD FOR ACCREDITED INVESTORS and the exclusion of primary residence’s value: 1.usa.gov/tcGLpX Learn to Code: A Non-technical Co-founder’s Guide (via @kathrynhough ) bit.ly/tLRCpR Twitter Highlights accredited investor entrepreneurs groupon Marc Andreessen quora raising capital Sean Parker SEC

Beyond Kickstarter: What to Do (and Avoid) Before Crowdfunding Your Company

Inc Startups

Equity crowdfunding allows entrepreneurs to raise to up a million dollars in capital from non-accredited investors. Is it right for you

Startups, Please, Don’t Break These Laws.

Up and Running

You go to a local startups meeting after dinner, and the panelists tell the crowd they’re looking for investor. Or you can talk to accredited investors , as defined by the the Securities and Exchange Commission (SEC).

New Crowdfunding Platform Launches With AngelList and Uber Alumni

Inc Startups

Republic lets early-stage companies raise up to $1 million in capital from non-accredited investors on the Web

Financing Your Business: Raising Capital Under Regulation D

VC Ready Blog

Anytime a privately-held company issues securities – to investors in a financing, to employees as compensation, or for any other reason – the issuer must be able to point to an applicable exemption from the general requirement that all issuances of securities be registered with the Securities and Exchange Commission (SEC). The issuer must furnish detailed information about the company’s business and finances to non-accredited investors, as required by Rule 502(b)(2).

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. By tying conversion to a financing, the debt holders effectively piggy-back on the valuation determined by the equity investors.

The Private Placement Memorandum in Seed Financing

VC Ready Blog

The private placement memorandum (PPM) is a document that companies may, and sometimes must, provide to potential investors that includes detailed financial and non-financial information material to an understanding of the issuer, its business and the securities being offered. The Securities and Exchange Commission requires that a company provide a PPM to all non-accredited investors in any financing relying on Rule 505 or 506 of Regulation D.

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. By tying conversion to a financing, the debt holders effectively piggy-back on the valuation determined by the equity investors.

Advantages of Convertible Debt in Seed Financing

VC Ready Blog

A convertible debt financing is similar to a traditional loan in that the company borrows money (often from angel investors, but sometimes from friends and family or even VCs) and commits to repay it with interest by the end of the term of the loan. By tying conversion to a financing, the debt holders effectively piggy-back on the valuation determined by the equity investors.

ProfessorVC: What does it take to be an Angel Investor?

Professor VC

What does it take to be an Angel Investor? To the SEC, it means that you are an accredited investor and To the man (or woman) on the street, a minimum qualification would seem to be an interest and ability to invest in early stage ventures. However, that is not always the case as there is no qualification to set out your shingle as an angel investor or form an angel group. Labels: angel groups , Angel Investors. Card Counting for Investors. ProfessorVC.

Crowd-Funding Success Usually Brings New Challenges

Gust

Many entrepreneurs seems to be convinced that the “crowd” of regular people using the Internet will somehow solve their startup funding needs, when they sense a lack of interest from accredited investors. Pebble watch crowd-funding via Wikipedia. Professionals maintain that there is plenty of money and equity for qualified startups, and funding marginal startups via any source will only make Read more >. Invested Interests crowd funding entrepreneur funding startup

Where would I go to invest in startups or emerging companies?

Gust

” and the second is “Are you an Accredited Investor by that country’s standards?” ” If we’re talking about the US and you are NOT at the Accredited level ($1 million in investable assets, or $200,000 annual income), then for the moment you are actually not allowed to invest in privately held startups (emerging public companies, Read more >. The first question you need to ask is “What country are you in?”

Get Rid of the Accreditation Requirement

Brad Hargreaves

Brad Hargreaves | startup adventures in nyc a blog by Brad Hargreaves HOME Me Press HOME Uncategorized Get Rid of the Accreditation Requirement Get Rid of the Accreditation Requirement As anyone who has tried to raise angel capital knows, there are strict restrictions on taking money from individual investors. Unless, of course, those individuals are Accredited Investors as defined by federal securities law.

Can a private company take investment money from anyone?

Gust

Unfortunately, a private company in the US may not take investment money from “anyone” The only people who are legally eligible to purchase an equity interest in a private company without a great deal of special paperwork are, as you noted, Accredited Investors. It’s binary: you either are, or are not, an Accredited Investor.

Can Fortune 500 executives also be angel investors?

Gust

There are quite a few senior executives of large companies who are angel investors. The only legal issue is that they need, like anyone else, to be an accredited investor. Invested Interests angel investors fortune 500 executives private company public company

Where would I go to invest in startups or emerging companies?

Gust

” and the second is “Are you an Accredited Investor by that country’s standards?” ” If we’re talking about the US and you are NOT at the Accredited level ($1 million in investable assets, or $200,000 annual income), then for the moment you are actually not allowed to invest in privately held startups (emerging public companies, of course, you can buy on the stock market like everyone else.).

SEC Adopts New Equity-based Crowdfunding Rules

SiliconHills

The difference is up until the change, only so-called accredited investors, high net worth individuals, could […] The post SEC Adopts New Equity-based Crowdfunding Rules appeared first on SiliconHills. The U.S. Securities and Exchange Commission approved new crowdfunding rules last Friday allowing companies to raise money from anyone. The new rules allow companies to offer up to $1 million a year in securities through online equity-based crowdfunding portals.

SEC 53

Tech Wildcatters Pitch Day May 2016

The Startup Lawyer

Tech Wildcatters, the original Dallas accelerator, is hosting their first pitch day of 2016 on May 26th at the House of Blues in Dallas.

Jumpstart Our Business Startups Act – How Will this Legislation Impact Your Startup?

Early Growth Financial Services

In order to reach out to private investors, you needed to have existing connections. Investors must be accredited investors. Even though you can now widely promote the fact that you are fundraising, you’ll only be able to accept funds from accredited investors. Accredited investors are … Continue reading → Legal Jumpstart Our Business Startups, a piece of the JOBS Act, just went into effect on September 23, 2013.

Is it legal to solicit investors for a startup since the JOBS Act has passed?

Gust

However, under another part of the JOBS Act dealing with General Solicitation , startups, which have always been allowed to sell shares of stock privately only to Accredited Investors (rich people with investable assets over $1m or income over $200K) will, for the first time, be allowed to market that sale to anyone, once those provisions go into effect this summer. Invested Interests investors jobs JOBS act law legality solicitationYes and No.

Modern Day Patron of The Arts on Upstart

Feld Thoughts

In this new model of crowd-funding, accredited investors back entrepreneurs and have the option of signing on as mentors. FYI – I’m not an investor in Upstart , but I am a big fan. As investors, are we the modern-day patrons of the arts?

Today For The First Time in 80 Years, You Can Ask Total Strangers to Invest in Your Business

Up and Running

Regulated securities are off the table for small businesses and start-ups, and the chance to pitch to a pre-screened room full of accredited investors is only for management teams that are part of high-power business networks.

If You Can’t Find An Angel Investor, Look Again, Here

Startup Professionals Musings

If your startup is looking for an angel investor, it makes sense to present your plan to flocks of angels, and assume that at least one will swoop down and scoop you up. Angel investors are people too.

SEC Proposes Rule Disqualifying Felons And Bad Actors From Rule

Recent Buzzes - VC Experts, Inc.

Rule 506 of Regulation D ("Rule 506") provides a "safe harbor" from the registration requirements of the Securities Act for securities sold to accredited investors and up to 35 non-accredited investors. A new rule proposed by the SEC on May 25 would add a hurdle for companies seeking to raise capital in a private placement offering.

How the JOBS Act Is Legalizing Equity-Based Crowdfunding

Growthink Blog

The JOBS Act Opens Up Equity-Based Crowdfunding The key goal of the JOBS Act was to make it possible to raise funds from investors through certain crowdfunding sites in exchange for equity in your company.