The Accredited Investor Paradox

As time wears on and I become more seasoned at raising investment funds one thing becomes abundantly clear to me: most accredited investors don't need you and are well-versed at playing big league ball.  Of course there are doctors and plenty of folks too busy to manage their investments. However, the savvy business owners know how to negotiate a good deal and navigate the enviornment skillfully.  

This is quite challenging for people looking to raise funds in our current environment that is devoid of bank money.  You can have great projects with high yields and no funds to chase them down.  The government thinks they are protecting folks from spooky investment opportunities.  What the bureaucrats are really doing is building in barriers to entry for entrepreneurs that seek ACCESS to capital and not the lowest cost of capital.

The irony of this whole setup is that those folks with the accredited investor moniker are the very folks that don't need the extra yield that is baked into the best deals.  When you have a small capital stack seeking optimal yields is key to grow the size of your stack.  The money needs to work much harder for you to get to your goal.  If you already have access to a lot of cash your money doesn't need to work as hard and you can be more selective with your investments.  

The entrepreneur chasing down their dream can't raise money from those that need the yield the most.  They also have a hard time raising it from those that need the yield the least because of the built-in risk aversion or difficult terms.  The pool of investors that is left are the busy professionals with excess money to put to work.  These are the same folks that listen to the media for their investment advice.  The paradox is quite challenging to overcome!