In case you missed it, the SEC last week expanded the accredited investor rule by adding a new category of accredited investor that includes tribes and other government entities.
A few thoughts:
(1) Sovereignty: I appreciate the addition, as it further eliminates the stigma / perception that tribal groups shouldn't be able to manage their own affairs - a win for sovereignty.
(2) Already Accredited: While the accredited investor change seems valuable on the surface, the reality is tribal groups could already qualify as accredited investors - and the method in which they could included a pathway to more focused investment governance. In many cases, it was as simple as setting up a basic LLC.
(3) Qualified Purchaser: A more valuable change, in my opinion, would have been to expand the definition of qualified purchaser to include tribally controlled entities. Tribal holding companies still have to meet a $25M threshold for "super accreditation" vs a $5M threshold for similar entities.
(4) Beware Unsolicited Inbounds: Tribal leaders are bound to see an influx in unsolicited investment opportunities related to this change. Many of these will have risk of significant or total loss that accompanies the upside potential.
(5) Up Your Diligence Game: With the removal of this restriction, tribal leaders must be even more diligent when evaluating potential investment and partnership opportunities. I'd hope tribal leaders looking to enter the private markets will do so with intention - purposefully crafting a data-driven investment thesis and leveraging trusted advisors who have "been there / done that" and have a track record of demonstrable success. The first thing I always ask when I get an unsolicited opportunity is "why did this deal come to me"?
What are your thoughts on this recent change? Are you seeing an influx in unsolicited opportunities? How is your group reacting or changing its approach to private market investments?