I'd prefer to see certification programs that people raising money must apply-for, and have that be the basis of whether an investment is valid for the market, rather than placing a capital requirement on potential investors as the way to determine if an investor is smart enough to reject scams, and thus save the government from complaints and minimize lawsuits than what would happen if joe public and his granny could invest their savings.

Perhaps there could be a certification program too for people wanting to invest.

This I think would free up capital and opportunity, ie real micro finance.

Or, there could be a standard waiver-of-claims-of-unsophistication allowing those under the current 'accredited' limits to get the same legal treatment as those meeting the limits.

I think the key with micro-finance is that investors can be diverse, and they can actively seek investments which they can then personally assist, and at the same time entrepreneurs can also try and locate the right investors who'll facilitate the growth of their system.

This is something baby-boomers would love doing, with the time, disposable income, and connections they can offer.

Furthermore, imagine being able to tell a CEO "we'll let you use our api but only if we can have equity in your system." In this case, microfinance supports systems integration.

Another benefit, is that micro-finance would allow entrepreneurs to raise funds more quickly to build more systems, with the goal of having 1 or 2 accepted into some larger system that can pay for its usage.

-- I am thinking a http://www.kiva.org but for entrepreneurs and investors. It'd have to track reputations and act as a hub for financings and subsequent distributions.

I like the gist of your point, but this line scares me a lot. Too much opportunity for political favors or political blackballing.

On the other side of the coin, investors could take a simple multi-choice test on ROI, accounting and finance principles .. whatever.

I'd have to brainstorm further. If an arm has a problem, you don't cut it off, you fix it and make sure it doesn't happen again with creative solutions - because you're not solving any problem by amputating (or rather not applying that solution correctly if there are healthier alternatives), you're just creating more problems.

-- another solution may be to simply cap investments at a certain amount, so people can't invest their life-savings in one go.

-- also, a way to search on these micro investments (and micro investors too) would be great: http://www.google.com/finance/stockscreener http://www.formds.com/filings (hat tip gojomo)

Meanwhile, I have easily lost an angel investment's sized amount of money in equities and derivatives I've controlled. (and made many times that in positive returns... but it is the losses the government pretends like they are protecting me from.)

I could have been putting $15k-$20k into several startups a year, for the past 15 years, up to one a month in recent years, if the government would let me.

Think about that-- it would have been ILLEGAL for me to invest in these companies (or for them to take my money)... while at the same time I've incurred complete losses of the same size in the public markets, and could blow all of it and more at any casino on the country in a weekend.

If you could put 15-20k a month into startups, how are you not meeting the accreditation reqs?

I think the requirements are to cut off companies from taking investments from little old ladies. It's the startup that would get in trouble, not you.

You considered talking to a lawyer?

If preventing little old ladies was all that was needed, then it could be accomplished with a wavier.

I've done approx 45 investments. One has returned (a small amount) of money in five years, so far.

And, perhaps he fudged some numbers, by inflating the value of something illiquid, to claim to be accredited slightly before he was.

As I understand it -- but could be wrong, IANAL -- this requirement isn't a matter of providing formal documentation to the government beforehand, but of asserting your status to the security issuer, perhaps with some documentation, and them accepting your assertion.

Only if things go south, and disputes/lawsuits begin, would the fact that money was accepted from non-accredited investors begin to cause liability and enforcement troubles for the issuers. So the issuers are motivated to ask for some documentation, but could also easily 'look the other way' or accept flimsy assertions in some instances.

This is the last thing the valley needed though.

Basically, there's actually some studies that suggest Somalia is doing _better_ under 'anarchy' than not. It's only after the UN stopped trying to impose a state that things started getting better.

http://rru.worldbank.org/Documents/PapersLinks/280-nenova-ha... suggests that the private-sector economy in Somalia did OK during its period of anarchy. (Arguably it's still in anarchy, but less so than before 2006.)

http://www.independent.org/pdf/working_papers/64_somalia.pdf claims that Somalia's economic performance and standard of living "improved during its period of statelessness". Cautionary note: this paper was put out by a libertarian think tank; I don't know enough about their level of integrity to know whether that's worrying.

http://www.peterleeson.com/Better_Off_Stateless.pdf says that the government of Somalia before its period of near-total anarchy was so awful that anarchy was better.

The main takeaway from all this is probably that a sufficiently bad government can be even worse than anarchy. But it also suggests that Somalia was in such a terrible state before its government collapsed completely that any troubles after that have a plausible explanation other than the evils of anarchy.

So, "Welcome to Somalia" was arguably unfair. On the other hand, there don't seem to be a lot of better examples of anarchies available for inspection...

I think you will find that:

1) Anarchies, almost by definition, spill into neighboring countries in the form of violence and/or refugess. This is the reason the U.N. intervenes in the first place.

2) A system of governance imposed by outsiders may be worse than anarchy, but self-governance, given a decade or more, will result in conditions better than anarchy. Indeed, I believe that left alone, an anarchy over time will develop into some form of stable government. Usually it's a dictatorship but there is a small chance it may be some form of self governance.

These are both as yet unproven claims based on my intuition of course. If someone has data to back these up or refute them, that would be really interesting.

I, too, wish there was better data on this.

People can peacefully collaborate on their mutual security without coercing each other.

This is just one example. Obama took over general motors by force, against the will of bond holders and handed out a large chunk to the unions.... And then a few months later a big scare was started against Toyota on spurious grounds. This is not a coincidence.

Recently they made it illegal to sell private health insurance (not fully in effect yet so you can still get it, though prices are rising) and soon only government insurance will be available, though private companies will be allowed to underwrite, presuming of course, that they currier enough favor with government regulators.

The very definition of government-- a monopoly on the use of force over a geographic region- is anti competitive, as it prevents ant other governments from forming in the area... Even if the people in a particular area prefer a different form of government.

"I remember my mother. She was 52 years old when she died of ovarian cancer, and you know what she was thinking about in the last months of her life? She wasn’t thinking about getting well. She wasn't thinking about coming to terms with her own mortality. She had been diagnosed just as she was transitioning between jobs. And she wasn’t sure whether insurance was going to cover the medical expenses because they might consider this a preexisting condition. I remember just being heartbroken, seeing her struggle through the paperwork and the medical bills and the insurance forms. So, I have seen what it's like when somebody you love is suffering because of a broken health care system. And it's wrong. It's not who we are as a people." http://en.wikipedia.org/wiki/Ann_Dunham

And the people must approve many measures and certainly those changing the constitution of the country. They have referendums all the time and also proportional representation, which aligns the legislature with the voters.

Of course, this means Switzerland minds it own business and won't invade other countries, but I guess that's the downside of government not driven by anti-competitive urges.

The downvotes are ok. There seems to be an element here that doesn't like it when you state the obvious, but most are rational though.

I'd be quite surprised if we see the issue cross over into the mainstream.

http://blogs.wsj.com/venturecapital/2010/09/24/the-daily-sta...

http://www.bbc.co.uk/blogs/thereporters/maggieshiels/2010/09...

http://www.businessinsider.com/angelgate-is-overblown-2010-9

What stood out to me the most, maybe because I'm not in SV, but the claim that ~10 "angels" were involved with 99% of the startups in SV. That just doesn't seem possible in a really healthy startup environment. I mean, there are startups that self boot-strap, there are startups that have a single owner that can fund them, there are startups that have a reputation and pedigree and go straight to institutional funding. There are also companies that stay below radar. How many software companies are we talking about in the greater SV Bay Area? 1200? 1500? And these 10 guys are in nearly all of them? Surely these are only the startups that fill in their crunchbase details or something, right?

Does nobody go outside the valley for funding?