AngelList has soft launched a new feature this week that should make investors very happy. Basically, AngelList will accredit any investor, for free, and let them use that accreditation, anywhere, via an API or just by sharing a document. You can access Accreditation here.
The network is debuting Accreditation Reports, which are web pages hosted by AngelList that investors can use to confirm their accreditation status. Once created, it can be reused for any investment that requires proof of accredited status. According to AngelList, Accreditation Reports meet the SEC’s new 506(c) accreditation standard for investing in publicly fundraising companies. It also meets the standard for investing in privately fundraising companies (the biggest difference between the standard for public and private fundraising is the requirement to provide proof of your finances for public financings.)
As Fred Wilson has written, when you make a private investment in a company, VC fund, or private equity or hedge fund, lawyers require you to fill out a form to ensure that you are a qualified or accredited investor, according to SEC regulations. form is created by lawyers to make sure that we are qualified and/or accredited investors. Investors have to keep filling out these forms across every investment/closing, which is tedious.
Previously on AngelList, investors only had to fill out the form once per valid time period (3-12 months depending on which method was used), but it was always in the context of a specific closing. So an investor couldn’t use the form on AngelList unless they were closing a transaction online on AngelList. And the investor couldn’t re-use it outside of AngelList.
Via the new AngelList feature, they can just do it once for an AngelList closing and/or share the resulting certification with a click with the lawyer or platform in a different closing, up to a year later. Additionally, a platform like Secondmarket or Equityzen can pull it via AngelList’s API (with the investor’s authorization) if they making a secondary trade on their platform.
Filling out the forms around fundraising, whether it be on the startup or investor side, can be an extremely time-consuming and tedious task, especially if a startup has a dozen or more investors. If AngelList’s new Accreditation feature saves time for investors, and lawyers, then founders win too.