Wisconsin Technology Council: WAN, state angel groups send letter to SEC to protect startup funding

Contact: Dan Blake at 608-442-7557

To learn more online: www.wisconsintechnologycouncil.com

WAN, state angel groups send letter to SEC to protect startup funding

MADISON – The Wisconsin Angel Network submitted a letter to the Securities and Exchange Commission this week urging regulators to keep the current net worth and income thresholds in place for establishing accredited investor status.

Nine angel groups and networks across Wisconsin signed on in support of the letter. The SEC is conducting a review of the current accredited threshold of $1 million net worth, excluding the value of a primary resident, or $200,000 in annual income.

The letter outlined the damaging effect raising the threshold would have on the ability of companies in Wisconsin and across the nation to raise financing from angels, the primary source of funding for startups.

“A contraction in angel investing would stall local economic development, university technology initiatives, and stem innovation and job growth,” the letter states. “In short, a higher threshold would widen the ‘flyover state’ funding gap.”

Angel investors put $24.8 billion into nearly 71,000 early-stage companies in 2013, according to estimates from the Center for Venture Research at the University of New Hampshire.

In Wisconsin, angels continue to play a critical role in helping fund new companies and in providing mentoring and additional funds as companies grow. A total of 86 companies raised more than $128 million from angels and other early stage investors in 2013, according to the 2014 Wisconsin Portfolio, an annual publication that tracks startup financing in Wisconsin.

Some organizations have suggested raising the thresholds for inflation (increasing net worth from $1 million to about $2.5 million, and increasing annual income from $200,000 to about $450,000 for individuals.) Such an increase would reduce the number of accredited investors by about 60 percent, according to the Angel Capital Association.

WAN’s comment letter, along with letters from support organizations, angel networks and others, can be found on the SEC’s website at: http://www.sec.gov/comments/s7-06-13/s70613.shtml

The Wisconsin Angel Network serves as a “network of networks” for angel and other investors in Wisconsin. Created in late 2004, it has grown from a handful of established investment groups to more than 20 in locations across Wisconsin. Members include venture capital firms, corporate strategic partners and investors outside Wisconsin who sometimes co-invest in state deals.

For more information, visit www.wisconsinangelnetwork.com or www.wisconsintechnologycouncil.com