Joe Lonsdale, the co-founder of Palantir Technologies and an investor with the Formation 8 venture firm, says the SEC's proposed changes to startup funding rules are unrealistic.
Lonsdale co-founded Palo Alto-based Palantir and is a general partner at San Francisco-based venture firm Formation 8.
So he says he knows firsthand the problems that would be caused if the Securities and Exchange Commission's proposed changes in startup funding solicitation rules are adopted.crowdfunding advertising
The SEC has proposed requiring far more documentation by startups who solicit funds publicly. This has raised fears among some that even pitching at an accelerator Demo Day without filing a Form D 15 days in advance could run afoul of the law and result in a one-year fundraising ban.
The government has also proposed requiring more diligent verification of accredited investors who fund startups. This could require angel groups and others to obtain financial documentation that their members or Demo Day attendees have at least $1 million in net worth (minus real estate) or an annual income of at least $200,000.indiegogo marketing
"As a founder of multiple companies which have raised hundreds of millions in private capital, I know first-hand how onerous and distracting the fundraising process can be," Lonsdale wrote in a letter to the SEC.
He said he understands the diligence process and the risk associated with investing in early stage companies, but "fundamentally disagrees" with the SEC plan.kickstarter marketing
"These changes place unrealistic pre-filing requirements on early stage companies, a policy which shows a total lack of understanding on how young companies operate," he wrote. "I urge regulators to listen to those within the business community and make no changes to Regulation D."kickstarter project
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