MassTLC reached out to U.S. Senators Brown and Kerry regarding two provisions of the initial Senate financial overhaul bill, each of which would have tightened rules on angel funders and possibly curtailed the availability of funds to entrepreneurs. The Council urged the Senators to pay attention to concerns about these provisions as raised by TECNA, an organization of technology associations from across North America that includes MassTLC.
Angel investors are a critical component of our technology ecosystem -- particularly to entrepreneurs in fast-growing sectors such as mobile applications, social media, and digital games as many innovative new ideas are untested. Given low barriers to entry, the corresponding capital requirements are often low as well.
Under current law, angel investors need to have either $1 million in net worth or income of at least $250,000. The original provisions of the financial reform bill would have raised those requirements to $2.3 million in net worth or $450,000 in current income. According to the Angel Capital Association, those provisions would have disqualified 77% of the current investors and also would have subjected angel investors to more stringent regulation, especially when a deal involved angel investors from more than one state.
According to reports from D.C., there is good reason to believe that the Senate leadership may have already agreed to make changes in the bill -- which may be debated and voted on this week -- to keep the current angel requirements intact. MassTLC nevertheless is making sure our Bay State lawmakers are aware of the impact the bill could have on job creation in our local tech industry -- the second largest employer in the Commonwealth.
MassTLC will continue to work on issues like this, and the Start-Up Visa bill, that impact the growth of the tech sector and give the Massachusetts tech sector a more consistent voice in public affairs.