Congress Continues to Kill the Golden Goose of Innovation UPDATED

Fred Wilson of Union Square Ventures points out two unnecessary clauses in Dodd's banking bill which continues to pluck the golden goose of venture capital towards a dead duck: to raise the threshold for a qualified investor to be an angel, and to remove the simplified Federal safe harbor for venture investing. He wonders why such clauses matter in a financial reform bill dealing with large commercial banks, since angel investing does not rely on these banks. Then he asks why have these thresholds at all: why make it hard for friends & family to invest in a friend's start up? 

First Sarbanes-Oxley, then demonization of options, modification of option accounting, changes in tax laws, etc etc. The VC industry is waiting for the next big shoe to drop, a change in tax treatment of carried interest. What's the point, other than the Politics of Envy? VC had nothing to do with the credit crunch, and everything to do with keeping the US competitive. 

The industry is now voicing their concerns, so maybe they can short circuit this. Hold the cynicism for the moment. 

UPDATE: the outrage at the Dodd proposals pour in. VentureBeat notes a third restriction, which requires start-ups to register with the SEC and wait 120 days for approval! Are start-ups now public offerings?  As you might imagine, the Tweets are fast and furious:

• My favorite is from Keith Rabois of Slide: “Anyone still need more evidence that Obama and the Democrats intend to destroy Silicon Valley and the dreams of entrepreneurs?”
• Chis Sacca, an angel investor formerly at Google, and a visible Obama supporter, calls the 120 day waiting period "frankly ridiculous" since he can fund companies who launch and gather thousands of customers in that period

Glad to see that liberals hate this too. I wonder how they will react when ObamaCare is layered onto their startups? 

Comments

[marketman]

Hochberg issued a "Special Update" yesterday (after the market reversed) getting all of us E-Wavers ready for today's regularly scheduled STU.

Can't wait to hear what he says!

[P3 dude]

I heard that Hochberg said (today) that the rally from SPX 1044 doesn't reveal a valid count. - - - Is that true?

[yelnick]

Marketman, I commented on the special update in my Exhaustion Gap post. 
http://yelnick.typepad.com/yelnick/2010/03/exhaustion-gap.html 

[yelnick]

P3, what Hochberg said is that "there is no satisfying way to label the move up from the February 5 low, or the even shorter-term swings over the past several days, without compromising some of Elliott's guidelines." He had thought the Dow was in a running triangle or expanded flat, but that no longer fits. We remain in a channel, and until e break below and stay there, the uptrend is still on. He gives a level to watch on Monday for his subscribers.

[Roger D.]

I have said that we have been in a rising wedge from the March lows. Thus the mass confusion in EW land. I expect another run up starting Monday to confuse Hochberg even more. But a blind man could see what is really going on. All the indexes will build tops next week and possibly into the week after. Then the collapse will start. Look for a April dive and then Sometime in May June the Crash to start with the Cardinal climax to kick of the 3rd of 3 sometime in July August. Final low sometime late 2010, early 2011 below 3000.

http://www.screencast.com/users/parisgnome/folders/Default/media/c3ffc2ae-6b76-4cae-bdbd-69274aa0a63c

Roger D.

[Eventhorizon]

EWI would do well to stop looking at the Dow. It is a poorly designed index due to its weighting scheme.