The article is behind a paywall, but I'd be curious how big this population is. How much actual funding derives from investors in that range? My guess is not much, and of that I suspect a lot of it is of the "rich uncle" form, where you can just make the trusted relative or friend a "founder" and get around the rule.
You do not need to make the relative a founder. When it comes to relatives you probably do not need to worry about the accredited investor stuff at all, as there is an exception for purely private placements. (this is not legal advice, do consult a lawyer).
Anyways, I agree that the lower end of the accredited investor range probably does not contribute much or anything to angel investing.
I seem to recall reading some advice that friends-and-family money is limited to a couple dozen people, and their involvement can make early VC rounds more complicated therefore harder to get. Is there anything to that?
The exception for private placements is not limited as to people or amounts invested. But a lot of lawyers do not like using that exception because it is not entirely certain what constitutes a private placement. So if they are not very close "friends and family" you may get in trouble. Therefore, a lot of lawyers prefer to use other better defined exceptions.
Regarding VCs, they dislike any earlier investors, and they probably dislike laypeople more because they prefer to deal with professionals.
In any event, again please make sure you consult a securities lawyer for your particular situation. I am really an IP attorney, so while I know the securities laws I do not have much experience in that field.
"they probably dislike laypeople more because they prefer to deal with professionals"
If they've got a clue they most certainly do. There's few things worse than dealing with a squirrelly non-professional investor (been there, done that, both myself and my father).
Still, if you have to get money somewhere to attract bigger investments and if this bill passes without fixing these problems you may find yourself pretty much limited to "very close "friends and family"".
I.e. if you live in a state where all others are forbidden to invest ... and from that TechCrunch item posted to HN the association of those state regulators may be the entity that's pushing this hard. Which means we may get much less of a fix that we desire/need.
