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The problems with proportional would be twofold: 1. How can the company taking the investment verify that the investor doesn't have other Angel investments? Rem
by kevinpet 15y ago
The problems with proportional would be twofold:
1. How can the company taking the investment verify that the investor doesn't have other Angel investments? Remember: this is most important from a startup perspective to make sure you're able to do clean funding rounds without dealing with the fallout of non-accredited investors.
2. There's nothing to stop people from repeatedly losing 10% (or whatever percent you allow) on stupid gambles.
I'm not convinced that academic credentials would be that useful either. I'd trust someone who's run a plumbing business for ten years far more to evaluate a startup investment than I would your average MBA. I thought it amusing that Swenson talks about university professors as if they are automatically financially sophisticated (one of the few points not backed up by data in Unconventional Success).
- gojomo 15y agoThere is nothing to protect someone who is reckless or gullible: they can lose all their money on currently-legal schemes, as well. If an investor provides false/incomplete documentation that their investment qualifies (as an acceptable proportion of their net worth or other 'government approved' investments), then that fraud should be the investor's problem when things go south, not the receiving company. Current 'accreditation' is not verified by the government, but rather asserted to the company/lawyers with enough credibility to convince them. Is someone who inherits a million dollars more qualified to invest $10K-$990K into a risky tech venture than someone who's actually earned $10K-$990K in the same field as that venture? Because that's the logic a dumb-money wealth test suggests.