The Senator Has A Plan

Senator Chris Dodd has a plan to make investing in new ventures more difficult.

...Dodd’s bill would require startups raising funding to register with the Securities and Exchange Commission, and then wait 120 days for the SEC to review their filing. A second provision raises the wealth requirements for an “accredited investor” who can invest in startups — if the bill passes, investors would need assets of more than $2.3 million (up from $1 million) or income of more than $450,000 (up from $250,000). The third restriction removes the federal pre-emption allowing angel and venture financing in the United States to follow federal regulations, rather than face different rules between states.

The above linked article has the reactions of a number of individuals. Here are some quotes from those individuals.

Robert E. Litan is vice president of research and policy at the Kauffman Foundation who writes at the Huffington Post had this to say:

Various studies published or sponsored by the Kauffman Foundation have made it abundantly clear how dependent the U.S. economy has been and will continue to be on the formation and growth of new companies. Angel investors are important funders of new companies. There is no good time to make it more difficult for them to invest in startups, and now -- when the economy is struggling to recover from what may be the deepest recession since the Great Depression -- is the very worst possible time to discourage angel investment.

I guess it depends on whether you want the economy to recover. Maybe recovery is not part of the plan.

A writer who calls himself Zemanta has this to say about Texas, one of the States that is weathering the financial crisis fairly well.

My dad sent me an email the other day pointing out a news story about an incubator in Texas that was cranking out startups and creating jobs. He told me that he believes that the work entrepreneurs and the people who work with them (ie me) are doing is incredibly important to the health of our economy. He's right and we need to explain that to Chris Dodd and his friends in the Senate. If they are going to reform accredited investor regulations, they should liberalize them, not constrain them further.

In other words our Congress is going in the wrong direction. No surprise there.

And how about this block buster from my first link:

Investors offered more criticism on Twitter, with Slide vice president Keith Rabois tweeting, “Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?”

But Mr. Obama has a degree from Harvard Law. I don't understand. Harvard graduates are supposed to be very smart. Nobel prize winner Friedrich August von Hayek explained it all in his book The Road to Serfdom. No amount of central planning can account for the knowledge of millions of individuals. Not even a degree from Harvard Law is good enough to paper over those difficulties. But that is our problem. Too many lawyers in Government. I suppose it makes law writing easier. But what good is that if Congress is writing bad laws?

It is becoming more and more obvious that the American Dream is under attack. Hard work, a good idea, and a lot of luck are not enough any more. Now you also need enough spare cash to buy at least half of Congress. What ever happened to limited government? It is enough to make you want to join a Tea Party.

I'd say if you have a good idea now is the time to put your plan in motion before the law goes into effect. These books might help:

Successful Business Plan Secrets and Strategies

Raising Venture Capital for the Serious Entrepreneur

And it might also be a good idea to write a Senator or two before you are forced to buy them retail.

Cross Posted at Classical Values