Starting today “civilians” can be angel investors — should they?

In the United States only rich people — known as accredited investors — were allowed to invest in private startups.


Back in the day, ‘computers’ were clerical personnel with mechanical calculators; they were the backbone of every financial services firm. Their salaries, and the office space to house them were huge fixed costs for the industry. The fees for financial services were necessarily high to cover those costs. To form an investment syndicate, track and disburse funds, it was simply not practical to accept investments below a minimum threshold. So solicitations to small investors had a high likelihood of being scams, and the regulations of the time reflected that reality. As technology marches on, the original rationale for the regulations go away, only to be replaced by vested interests that have evolved to exploit the regulations. Change is hard.

Today, administering the investments of 954 people in 45 syndicates can be done part-time by one person with spreadsheets in the cloud. Should ‘civilians’ be allowed to play the angel investor game? All of the original reasons for excluding them from participating have long since gone away.

Don’t get me started on credit card fees, they come from the same era…

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