A radical transformation has been taking place over the last year – forever redefining what it means to be an investor in America, and bringing investing into the Internet Age.
A key part of this transformation focuses on closing the gap in securities law between two types of investors: accredited and non-accredited. A non-accredited investor is currently defined as anyone who makes less than $200,000 per year, or has less than $1,000,000 in the bank. Anyone over that benchmark is deemed “accredited,” which means they’re graced with investment opportunities that aren’t available to the rest of the population.
The only distinction between these two groups is personal wealth. Not enough Americans know about this distinction or what it really means. Here are two important implications:
1) If you’re non-accredited (not a wealthy person), it’s illegal for you to be presented with investment offerings in private businesses unless you already know the founder.
2) If you’re trying to raise money for your company, it’s illegal for you to publicly broadcast that fact in an effort to attract investors. You can’t use your social network to find investors. If you don’t already know investors, which most Americans don’t, then good luck.
In short, our securities laws leave about 80% of Americans (non-accrediteds) standing on the sidelines in the wealth creation cycle of early-stage investing, while wealthy Americans enjoy exclusive access to participate.
It was 1933 when the first of these laws were created to protect vulnerable Americans from losing what little money they still had in the aftermath of 1929.
But the world has changed dramatically since then. Giving Americans equal economic opportunities based on their wealth or income isn’t just a political imperative. It’s a moral imperative.
