Wednesday, April 21, 2010

Dodd Needs an Angel

Lost in the national press’s attention to the Dodd financial reform bill has been any attention to what it does to angel investing. Angels are building the kinds of companies that represent the majority of net new jobs in the United States and this is exactly the wrong time to hinder that in any way.

For those of you who have not yet had the opportunity to review the related materials, look to the ACA Web site. Essentially the bill's current language recommends significantly increasing the thresholds for accredited investors.

Two issues would affect angels and entrepreneurs seeking angel financing:
1. A 120-day waiting rule before money can be put into a small business—good luck surviving,
2. Doubling of the investor requirements to $449,000 income and $2,250,000 net worth, increased for inflation every 5 years.

ACA has been the lead advocate for angels and the entrepreneurs who are REALLY the audience that would be affected and have been very involved in negotiations to improve the provisions of the bill with the Senate Banking Committee.

ACA is cautiously optimistic that the bill will include much improved provisions. Democrats plan to call for a vote to try to block a Republican filibuster that could prevent formal debate from starting on the bill, under development for months now. Sixty votes are needed to invoke "cloture," blocking a filibuster.

Democrats control 59 Senate votes and would need at least one Republican vote for cloture to proceed. It does not currently appear they have the 60 votes for cloture to avoid a Republican filibuster.

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