October 28, 2015
In an ideal world, anyone who’d like to invest in startups would be able to. However, because of a law created nearly 80 years ago, a whopping 97 percent of American households are legally unable to participate in investing in private businesses.
But that could change if the SEC finalized the long-delayed Title III of the JOBS Act, which would make it possible for non-accredited investors to participate in startup businesses and private firms. The big question is, how would this change the landscape of startup investors?
Two companies decided to find out. Mattermark, a leading San Francisco-based intelligence platform, and New-York based Quire, a company matching investors to opportunities, teamed up to create the 2015 Startup Investing Survey. The companies surveyed hundreds of United States respondents to gauge their interest in startup investment, and this week the survey results are live.
One of the biggest findings is that the results reveal a discouraging disconnect between who wants to be in a position to invest in startups, and who actually invests in startups today. 22 percent of the survey respondents were women, while 24 percent identified themselves as minorities; both of the groups overwhelmingly responded saying they want to be able to invest in startups. However, women make up only 8.2 percent of VC firm decision makers, while African American and Latino investors only account for about 2 percent, according to The Information.
“Title III would give women and minorities an immediate seat at the fundraising table,” says Erin Glenn, CEO of Quire. “This is a great thing for founders who can’t find capital under the current system, and it has the potential to fund startups that address problems faced by minorities of all types, not just problems that are dear to the hearts of VCs.”
Also interesting is the number of highly educated professionals and advisors who would like to invest, but currently don’t meet accreditation standards. 90 percent of respondents to the survey hold a bachelor’s degree or higher.
“Almost half of respondents holding a post-graduate degree or professional certification are unable to invest under current regulations,” said Glenn. “This doesn’t make sense. Some of the very people providing professional advice to startups aren’t deemed competent to invest in these businesses.”
The survey reached varying levels of financial expertise, with 46 percent claiming they had intermediate or less financial knowledge, while 14 percent claimed to be experts.
“I was very excited to see how much interest exists. While our guts told us people wanted to invest, I’ve had conversations with skeptics,” said Glenn. “It was great to prove once and for all there is wide demographic support amongst the tech community and its followers to invest in founders and innovation.”
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