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Comment by JumpCrisscross | Hacker News Reader

“For investors with an income of less than $100,000, investments will be capped at the greater of $2,000 or 5% of income. For investors within an income of more than $100,000, investments will be capped at 10% up to $100,000.”

Is the cap per investment or per person? E.g., if I make 100k, does that mean I can invest 5k total, or no more than 5k in any one company?

Also, is this an annual cap? What happens if I invest in January and the investment appreciates (or depreciates)? Does my cap move with MtM, or just record the cost?

Finally, isn't the "10% up to 100k" part redundant, since someone who is earning 1 million is an accredited investor by the traditional definition? Or is the 100k similar to the 2k, in that it's one part of a greater of function?

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From the bill-

(B) the aggregate amount sold to any investor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12-month period preceding the date of such transaction, does not exceed-- `(i) the greater of $2,000 or 5 percent of the annual income or net worth of such investor, as applicable, if either the annual income or the net worth of the investor is less than $100,000; and (ii) 10 percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either the annual income or net worth of the investor is equal to or more than $100,000;

EDIT- Wait, what if say your income is $150k but your net worth is only $80k? Section one says it applies if either net worth or income is less than $100k, but section two says it applies if either is greater than $100k. Hmmm.

So Grandma with $50k could invest in 25 start-ups at $2k each? I suppose if they each have at least a 8% probability of more than 10-bagging it...

No, she could invest $100 in 25 startups or $2500 total (5% of $50K). The limit was on total investment.

There are lots of people who don't have income, but have lots of net worth - they aren't worried about the reverse case. If your net worth is more than $100K, or make $100K, then you are in (ii).

You are still allowed only 10% though to invest (in total). So, if you have a net worth of $1M, you'd be capped at $100K invested per year.

We're actually working on a crowdfunding site that's been waiting on this law to pass to begin operating. That cap is an annual cap for individuals. Companies are limited to 1 million dollars of crowdfunding per year. I know there was a proposed 2 million dollar cap on how much a company can raise in a year if they had audited financials, but I'm not sure if that made it into the final cut.

If permitted by the law if and when it does pass, I would start a portal that co-invests in EVERY startup that is presented for crowdfunding through the portal. As an investor there is no better indication of legitimacy than when the sponsor has money in the deal. Then if and when your portfolio companies have success you have a real track record to build on and grow your portal.

That's unfortunately illegal. We aren't allowed to have any financial interest in any company on our site.

"Illegal"? They just passed the law and regs haven't been written yet. That's why I stated "if permitted by law" - I don't think there is "law" yet.

I'm not an expert on any of this, but since it is talking about annual income, I'd assume the limits are also annual limits.

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