The Angel Capital Association (ACA) recently sent out a letter regarding the US Senate Finance Committee’s Financial Reform bill. The bill’s intent is to reform the financial system since the crash in 2008. However, there are provisions in the bill which affect the angel community. Here is a link to the ACA’s letter. Here is a link to the members of the Senate Banking Committee. Please contact your Senator and urge them to support changing the angel and entrepreneur aspects of the bill.
Angel Capital Association
Many parts of the bill are troubling and here are a couple aspects of the bill that are alarming. The bill raises the hurdles to become an angel. Currently, you can be an angel if your income exceeds $200,000 per year, or joint income of $300,000 per year, or assets of $1 million. Under the bill provisions, the definition would change. 77% of current accredited investors could be eliminated. In the pending bill, the income requirement goes up to $450,000, and the net worth standard is raised to $2.3 million. Both levels are indexed for inflation. The bill could also make it significantly more difficult for angels to syndicate deals across state lines, and among angel groups. State by state regulation could increase legal costs, and increase legal risks. Recently there has been a movement by Angel groups in Wisconsin, Minnesota, Illinois, Indiana, Ohio and Michigan to work together to help each other. This bill could kill that effort. The bill has other provisions that are detrimental to both angels and entrepreneurs. Changes need to be made, otherwise there could be undue harm to angel groups, angels, and entrepreneurs all across the United States.
The Angel Capital Association has resources you can use in all areas of entrepreneurship. Here is a link to their site on public policy.
Hyde Park Angels is in the business of funding and supporting start up businesses in the Midwest. HPA has seen a lot of progress since forming in April of 2007. Currently, there are at least four private incubators for business that we know of in Chicago. There also are at least four that we know of at academic institutions in and around the area. The Polsky Center at the University of Chicago is a great example of an academic incubator. It is critical to the economic health of the United States that we support entrepreneurs. HPA is committed to that cause. Our angels invest their own money, and invest their own time in the building of businesses. Our angels and staff also devote a fair amount of time to the education of budding entrepreneurs at all levels in the educational system. We believe in entrepreneurs with our words, but we also support them with our action.
Hyde Park Angels wants to make it clear that we are not aligned with either political party. HPA supports the ACA and wants to gently point out that these provisions of the bill relating to angel capital and start ups will have adverse affects on entrepreneurship in the United States. We are here to support the growth of the US economy. People from both parties can hopefully agree with that goal!