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.