The SEC is taking a whack at broadening the definition of accredited investor, though proposed rules don't broaden in a way that most natural people working in tech will be that interested in. https://www.sec.gov/news/press-release/2019-265 … They're soliciting comments.
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Preventing outright scams is (and should be) in the SEC's other regulations, since we should care about scams targeting dentists no less than scams targeting e.g. schoolteachers, especially since dentists are a much more attractive target than schoolteachers (because they have $)
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It's not intrinsically obvious to me that decreasing volatility of returns should be in the government's interest or that the accredited investor standard is narrowly tailored to achieve it, given that retail investors have access to *very* volatile investments in public markets.
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Investors who seek volatility out of a desire to consume gambling are probably doing something which is against their interest, but they're a Robinhood account application away from e.g. making 100:1 bets on options which will expire worthless in less than a week.
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People invest in tech startups for all sorts of reasons, but one of them is the desire to 100X their money by causing something novel to exist in the world. Very, very few angel investments will succeed in doing this.
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But given that there is risk appetite in the world and that retail investors possess some of it, you should probably prefer them deploying their risk appetite against angel investments with a 5+ year time horizon versus weekly options on Tesla. First feels less like casino.
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Assets don’t equal sophistication, but they do equate to an ability to survive losses. Of course some people make bad bets and lose it all, because assets don’t equal sophistication.
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Second point: the constituency of outraged people who will vote you out of office for allowing such a dangerous thing to exist is much smaller with a sufficiently high bar for assets.
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