I remember the first time I heard the phrase "qualified investor" was in 2001 talking to the then CEO of Pictage. We had worked closely together the year before building the site and he knew me pretty well. At least I thought he knew me well enough to know that I lived with two roommates, had to work for living, and did not have a net worth over one million dollars.

So when I was attempting to excerise my stock options and he asked me that question, "Do you have a net worth over one million dollars?" I laughed out loud. I really thought he was being funny. But he didn't laugh back. He was dead serious. He had his CEO hat on and he was following the rules. The SEC wants to "protect" little guys like me from buying stock when I should be buying things like food and rent. This is why, traditionally, the average Joe cannot buy the stock of private companies. In fact you could argue the whole point of "going public" is to force the company to meet certain standards so it will be safe for average Joe to invest.

Enter Sprowtt. In the great tradition of companies like Prosper and SharesPost they are breaking down the legal issues and making the impossible, possible. And I for one love the idea. I'm a little suprised at the SEC for trying to protect me like this. It really conflicts with my traditional American values and the Horatio Alger myth I like to keep going. It's my money, why can't I buy stock vs. food if I choose?

And for companies looking to raise some capital it lets them by-pass NASDAQ and Sarbanes-Oxley and take their equity directly to the real street. I disagree with Newt Gingrich on many issues, but on Sarbanes-Oxley we see eye to eye. We had existing laws on the books to fight abuse like Enron. But Sarbanes and Oxley passed new laws that we didn't need. The end result is very few companies can go public now, and many programmers lost their admin rights on their work PCs.

When Prosper first launched someone sent an email around where I was working at the time, and it got the attention of the in house lawyer. He replied to all telling us to avoid Prosper because it was completely illegal. He said just because it's online doesn't make loan sharking any more legal. A few minutes later he sent another email explaing that he hadn't read Prosper's terms and conditions carefully enough and it was in fact perfectly legal. Ironically, it might have been better had I never got that second email because I went on to lose lots of money in risky Prosper loans, but that's not that point.

And the Sprowtt guys bring up an excellent point. Why was it okay for millions of Americans to give small donations of $50 each to the Obama campaign so they could "own a peice of the campaign", but the same American cannot be trusted to buy $50 worth of private company stock?

I'm sure I'll lose lots of money in new Sprowtt investments too. But I see it as my absolute right as a real American.