90% of Americans can’t invest in startups. Let’s change that now.
Idea: Eliminate accredited investor restrictions for startups and VC funds.
Accredited investor laws are outdated and regressive.
- Any adult can use Robinhood to buy risky options or use DraftKings to bet thousands on parlays.
- Why can only rich people invest in the best startup deals?
Early adopters of startups are often the most knowledgeable about their value.
- But many do not have the wealth or income to qualify as accredited investors.
- This prevents them from participating in early funding rounds.
- Example: If you were an Uber driver or rider in 2010, you knew it would be worth more than $4M.
- But unless you were already in the top 10% by the SEC’s accredited investor definition, you were barred from investing in Uber until May 9, 2019 when it went public at a $82B value.
- Uber is now under $60B market cap.
- Their share price is down to $29.60 from an IPO price of $45.
- What was a riskier investment: Uber in 2010 or Uber in 2019?
- The SEC sees risks all wrong.
- But unless you were already in the top 10% by the SEC’s accredited investor definition, you were barred from investing in Uber until May 9, 2019 when it went public at a $82B value.

Problem: The average person is not allowed to invest in startups.
- The SEC defines an accredited investor as having an income over $200,000 individually or $300,000 with a spouse, or having a net worth over $1 million, excluding primary residence.
- This means that just 13.7 million Americans, less than 10%, qualify to be an accredited investor.
Why do we block 90% of Americans from investments that could change their lives?
- The SEC argues that it’s protecting non-accredited investors from “riskier” startups investments.
- But what accredited investor laws really do is force 90% of Americans into the public markets, where retail investors frequently add margin and buy options to try to get more upside.
- This all benefits large financial institutions who profit whether retail investors make or lose money.
Biases in who can be an accredited investor lead to biases in who gets startup investments.
- Less than 1% of 18-34 year olds are accredited.
- The median accredited investor is over 60 years old.
- This severely limits which young Americans can build wealth as a founder or investor.
- Only 1.3% of African Americans are accredited.
- This directly affects startup funding for underrepresented founders.
- Just 1.2% of VC dollars went to Black startup entrepreneurs.
- This is the direct result of underrepresentation in accredited investors.
- Just 1.2% of VC dollars went to Black startup entrepreneurs.
- This directly affects startup funding for underrepresented founders.

Accredited investors aren’t inherently smarter or better capital allocators vs. retail investors.
- The angel and VC funds that outperform the market do so by broadly investing in many early-stage startups and getting one or more 1000X+ hits.
- Retail investors don’t have access to these startup deals now.
- Because of the power law dynamics and 1000X+ potential of startup investments, it’s even more important that everyone has access to these deals.
- Angel investors need just one of these hits to pay for hundreds of new investments.
- This will create a huge angel network to back future generations of founders.
- Angel investors need just one of these hits to pay for hundreds of new investments.
Objection: How do we prevent retail investors from getting scammed by frauds like Theranos?
- We need to end public solicitation restrictions so founders can pitch their startups openly.
- Scams like Theranos happen in private. If Theranos had fundraised publicly, thousands of scientists could have called out their errors before $800M+ in investor money was lost.
- Startups who raise publicly have to compete openly with others fundraising at the same time.
- This will incentivize startups to disclose more information to attract more investors.
We need to unite entrepreneurs, investors, activists, and politicians to change these rules.
- The current system benefits Wall Street and hurts the average American.
- An open funding market benefits everyone.
- It’s great for the 90% of Americans who can now invest early in the best startups.
- It’s amazing for the millions of startups who now have more access to capital.
Objection: Isn’t startup equity crowdfunding already legal?
- The JOBS Act in 2012 created a path for startups to use regulated crowdfunding to raise money.
- But the strict legal and financial rules in Regulation CF mean that it can take 3-6+ months to close funding this way vs. minutes with a SAFE.
- This hurts startups who do not have access to rich accredited investors.
- The reason why crowdfunding hasn’t gotten bigger is that the regulations around it are too complex.
- It’s still faster and easier to raise from angels and VCs.
Solution: Pass a bill in Congress that instructs the SEC to fully eliminate accredited investor rules.
- Let’s call it the Startup Investing for All (SIA) Act.
- Eliminate all accredited investor restrictions.
- Current: Investors must have a personal income of $200K+ or net worth of $1M+ (excluding primary residence) to invest in startups or VC funds.
- New: The SEC should remove all distinctions between accredited and unaccredited investors.
- 100% of Americans should be allowed to invest in all startups.
- Eliminate all public solicitation restrictions.
- Current: Only specific types of startups and VC funds are allowed to publicly fundraise.
- New: Any startup or VC fund should be allowed to share what they’re doing publicly.
- This increased transparency will make startup and VC investing safer.
- Remove the cap on the number of shareholders in a private startup.
- Current: Startups with 2,000+ shareholders or 500+ unaccredited investors must file its financials with the SEC.
- New: No limit to the number of shareholders in a private company.
- This will allow startups to raise larger rounds through crowdfunding and also enable “airdrops” or gifted shares to early customers and contractors.
- Remove the cap on the number of LPs in a venture capital fund.
- Current: VCs cannot have more than 100 LPs in a $25M+ fund or 250 LPs in a <$10M fund, and all LPs must be accredited investors.
- New: No limit to the accreditation or number of LPs.
- This will allow more emerging VCs to raise their own funds, which will increase funding access to underrepresented founders.
- Eliminate all accredited investor restrictions.
The Startup Investing for All Act will finish what the JOBS Act started.
- Let’s reduce regulations on startups and VC funds and allow anyone to invest in them.
- This will further cement America as the #1 global hub for startups.
Objection: Do we have the votes?
- This will be a rare bipartisan bill that can pass through our current divided government.
- The JOBs Act passed 390-23 in the Republican-led House and 73-26 in the Democratic-led Senate in 2012.
- Our Startup Investing for All Act can unite a similarly divided Congress.
- The JOBs Act passed 390-23 in the Republican-led House and 73-26 in the Democratic-led Senate in 2012.
- We are on the side of the 90% of Americans who can’t invest in most startups now.
Action: We need a wide base of public and private support to get this bill passed.
- Entrepreneurs: Tell your stories of how you struggled to raise money in the current system and how your startups would grow faster in this new system.
- Investors: Convince entrepreneurs and politicians to work together to expand access to startup funding and thus dramatically increase the number of startup founders and investors.
- Activists: Collect and share data proving that bias in accredited investor laws lead to bias in who gets startup investments.
- Politicians: Start drafting a bill that eliminates accredited and public solicitation restrictions and removes the caps on the number of shareholders for startups and LPs for VC funds.
Startup Investing for All is on my list of solutions to The World’s Biggest Problems.
- This idea is a work-in-progress. If you’d like to riff on it, hit me up @neilthanedar on Twitter!