Remove Restrictions On Gay Investors

Editor’s note: Dan Shapiro served as the CEO of Google Comparison Inc., Sparkbuy, and Ontela. He’s the author of a forthcoming O’Reilly book on startup CEOs and a lucky dad. Follow him on Twitter @danshapiro. has a simple mission, which is to get same-sex couples the same rights to invest in startup companies as heterosexual couples.

My dad received his PhD from Yale for a number of reasons. One of those reasons was that, just a few years before he enrolled, the university removed its Jewish quota. In subsequent years, both of my parents saw the even more egregious restrictions on African-Americans begin to slowly, painfully unravel. Their generation saw a wave sweep from buses to schools to wedding chapels as our nation desegregated.

I never thought I would see anything like this in my lifetime. Seeing America start to untangle, over the course of a few decades, a giant hairball of laws and prejudices and assumptions that have plagued the lives of gay and lesbians has been a singularly amazing experience. States have begun to recognize loving couples. The Supreme Court overturned the Defense of Marriage Act. And I have been watching friends and family I have loved and respected all my life come out to share with me and the world who they really are and who they really love.

Over the last decade particularly, I’ve taken a measure of pride that my community of entrepreneurs and startup investors has been relatively immune to this discrimination. I’ve always believed that the world of technology startups has never erected artificial barriers to those who want to pursue the American dream.

But we’ve got a bug in the code, and it was two lawyers who found it.

My friends Joe Wallin and William Carleton sent me an email out of the blue one day. They told me that they found something amiss with the SEC rules about who is eligible to invest in startups. We all read the rules, and the problem doesn’t look deliberate. It’s just an artifact of changing times and changing rules. But it’s a bad artifact, and we’ve got to set it right.

SEC rules describe something called “accredited investor” status. If you’re not an accredited investor, you are effectively blocked from startup investments. (Under the JOBS Act, small investments may be possible without accreditation, but larger investments — the angels who enable ideas to take wing — will still be restricted.) As a result, these rules around accreditation define who is, and who is not, a part of the startup angel community.

To take an excerpt from these SEC rules: “‘Accredited investor’ shall mean . . .  Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000.”

These gay and lesbian investors can’t use their partners’ assets or income to qualify as angels. Instead, they must qualify alone, under significantly more restrictive standards.

But we live in strange times. Couples who love each other, who’ve pledged their lives together, who’ve decided to join their resources together for an eternity, do so under more than one name: “marriage”; “civil union”; and “domestic partnership.” By only referring to spouses — which is defined to mean only married couples — the SEC disqualifies couples in civil unions or domestic partnerships in 15 states across the country. That means these gay and lesbian investors can’t use their partners’ assets or income to qualify as angels. Instead, they must qualify alone, under significantly more restrictive standards.

In the future I hope that, as a country, we set a single standard for what it means for couples to love each other, pledge their lives together, and join their resources. I hope that’s called marriage. But until we get there, the SEC needs to fix angel investing.

Startups are not just my industry but my passion. I’m proud of how startups have made this country better. Now it’s time for our country to make startups better. Please join me at in calling on the SEC to set this right. Let’s unlock dollars for small companies. Let’s welcome people of all backgrounds to the table. And let’s make startup investing available equally to all couples across America.

[Image via Shutterstock]