Senator Dodd’s reform plan could change the financial world for startups

Many entrepreneurs will attest to the fact that finding funds for a startup can be one of the most challenging parts of the process. A new financial regulatory bill proposed by Senator Dodd might mean entrepreneurs have to get more creative than ever in finding funds for their startups.

The legislation proposes to change the Securities & Exchange Commission’s definition of “accredited investor” in a way that might reduce the number of accredited informal investors financing companies in the U.S., reports Business Week. Dodd’s bill would allow an inflation adjustment that would increase the net worth of an investor from $1 million to $2.25 million.

Additionally, a report from TechFlash.com suggests the bill would force startup companies to file with the SEC when they receive angel funds, and if the SEC should fail to review the filing within 120 days, the funds will be turned over for state security regulators to review.

In light of these proposed reforms, future business owners might consider how they can increase their appeal to potential investors. Business incorporation might be a good way to show financiers that an entrepreneur is serious about a business venture, and solid business plans can also demonstrate that a company is a worthwhile investment.