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        - Forcing unnecessary financial disclosures

Have we not learned a damn thing from 1999? The whole reason retail investors have a chance is because public companies have to file an 8k every time the CFO farts

Healthy, high-caliber companies are far less likely to want anything to do with the unaccredited crowd anyway. Most will continue to raise capital through Reg D Rule 506 offerings, and 506(b) offerings specifically given the uncertainty around the proposed rules associated with 506(c).

It sounds like you basically want Rule 506 offerings without the accredited investor requirements. Debate over the wisdom of that notwithstanding, this was never the intention of the crowdfunding portion of the JOBS Act to begin with.

That's what many critics said before 506(c) but that's not how the market is behaving [1]. There's more value to a crowd of investors than easy dumb money, and I don't see why the personal wealth of an investor really matters.

I disagree with your interpretation of the intention of the JOBS Act. As I interpret it it's meant to allow all Americans the opportunity to invest in startups and small businesses while protecting them from losing all their money. Introducing regulations that cause severe adverse selection outweighs the benefit of those specific rules, in my opinion.

[1] I think the quality of companies raising publicly on Wefunder and AngelList speak to that, but I'm heavily biased. I respect your opinion even though I disagree with it. :)

> I don't see why the personal wealth of an investor really matters

Because you don't want people gambling with money that they can't afford. These regulations are about protecting investors while still opening up funding for startups.

That excerpt is taken out of context but to respond to the point you make: that's why there are income-based caps to how much you can invest as an unaccredited investor.

Obviously "healthy, high-caliber" means different things to different people.

As for how the market is behaving: I have personally heard several attorneys state that they're advising their clients to be very cautious about Rule 506(c) and according to media reports[1], this is the advice of many attorneys.

I am aware that companies are relying on Rule 506(c) for offerings on AngelList and services like yours, but in terms of the overall market for Regulation D offerings, this is a still a small number.

> I disagree with your interpretation of the intention of the JOBS Act.

You cited the $1 million cap as an example of a rule that is of concern to you. To my knowledge, this cap was an explicit part of the bill that Congress passed. As such, I don't see how the SEC could eliminate that restriction.

[1] http://www.crowdsourcing.org/editorial/ban-on-general-solici...

> Obviously "healthy, high-caliber" means different things to different people.

That's true, there's definitely subjectivity here. I make the assumption that YC companies are a proxy for "healthy, high-caliber" startups and my opinion of what will be deal breakers for that category of company is shaped by our customer development in the YC network. I could be wrong for a few reasons.

> As for how the market is behaving: I have personally heard several attorneys state that they're advising their clients to be very cautious about Rule 506(c) and according to media reports[1], this is the advice of many attorneys.

Indeed. I think there's a natural lean for attorneys to be more conservative and wait for things to play out a little. I believe that in the next year or two it will be commonly accepted, I've already seen a lot of attitude change over the past year. We'll see. I think this is something startups ultimately want - assuming all the concerns can be addressed. More fundraising options and a wider pool of value-add investors is a good thing if crowdinvesting can be done practically, IMO.

> You cited the $1 million cap as an example of a rule that is of concern to you. To my knowledge, this cap was an explicit part of the bill that Congress passed. As such, I don't see how the SEC could eliminate that restriction.

I did, in the 585 page document the SEC released they suggest a few adjustments to address the concerns people have. For example, the $1m limit might be applied to the fees collected by the funding portal.

> There's more value to a crowd of investors than easy dumb money

I disagree with this. I'll take advice from 2 people that I trust and admire before I'll poll 10,000 people. In my opinion, it's a distraction. That's why I believe it to be more valuable to have a couple of very smart & helpful investors rather than a lot of people with individual opinions and voices.

Maybe a little off-topic, but in some ways, this is what I admire about Steve Jobs, is seeing what people wanted before they realized they wanted it. I don't know if it's real or not, but the quote attributed to Henry Ford, "If I had asked people what they wanted, they would have said faster horses" does hold a grain of truth. He could cut past the noise of the crowd to see the potential of an idea. Ask someone in 2004 what they wanted in a phone, and "bigger" probably wasn't on the list.

We actually have 35 unaccredited investors in Wefunder and they have been valuable investors, some have been a lot more helpful than some of our accredited investors. A crowd of investors doesn't have to be all strangers and randos. They can be other founders, VPs in big tech companies (who don't quite pass the accredited bar yet), domain experts, someone famous (or internet famous), and people you know and trust. Or they could be your customers who love what you're doing.

I'm actually most excited about allowing customers to invest. There's some people who see what we're doing at Vidpresso, and basically nobody in media has enough money to be accredited, but I'd love to provide upside for people who believe in what we're doing.

> I'm actually most excited about allowing customers to invest.

You can already do that, they should buy your product. If they are so jazzed about it, they should tell their friends, and it should be easy for them to do so through whatever your product is.

... upside. It'd be great to give them financial upside if we're successful.

Regarding the $1M limit, the SEC document included comments regarding this limit. It looks like the limit is congressionally mandated.

From the proposed rules:

Section 4(a)(6) specifically provides for a maximum aggregate amount of $1 million sold in reliance on the exemption in any 12-month period. The only reference in the statute to changing that amount is the requirement that the Commission update the amount not less frequently than every five years based on the Consumer Price Index. Additionally, statements in the Congressional Record indicate that Congress believed that $1 million was a substantial amount for a small business. We do not believe that Congress intended for us to modify the maximum aggregate amount permitted to be sold under the exemption when promulgating rules to implement the statute. Therefore, we are not proposing to increase the limitation on the aggregate amount sold.

I agree with you that these three items could be dealbreakers for the high caliber startups, but aren't they mandated by the JOBS Act itself? (At least the first two, I'm not sure about the third.) I'm not sure the SEC can override congress' say on those matters.

The SEC has enough power to shape regulation to neuter some of those clauses. For instance, they're able to apply the $1m cap to fees collected by the portal (not amount raised) or add exceptions for certain types of offerings. [1]

So in theory they could add exemptions or weaken other clauses. I'm not sure exactly where the line is drawn (e.g. can they entirely rewrite the JOBS Act?) but I believe the rules outlined in the JOBS Act are mostly to express intent of Congress and it's the job of the SEC to implement them in a way that works and maintains the intent.

[1] They request comments on those ideas and more in the big PDF. See page 20 of http://www.sec.gov/rules/proposed/2013/33-9470.pdf