06/13/2010 05:12 am ET | Updated May 25, 2011

Financial Reform? Sure. Kill America's Future Green Economy? No thanks.

In the State Of The Union address, President Obama outlined a plan for economic growth, with green jobs as a cornerstone. Saying "the nation that leads the clean energy economy will be the nation that leads the global economy" the president directly mentioned jobs in clean energy and technology no less than six times. And his vision was clear.

In his own words:

"We should start where most new jobs do -- in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides it's time she became her own boss. Through sheer grit and determination, these companies have weathered the recession and they're ready to grow."

These are exciting and encouraging words, and for me they're deeply personal. As a founder of The Belgrave Trust, a service that helps individuals and businesses become carbon neutral, I'm just one member of a large and diverse group of technologists, inventors, advocates -- and yes, dreamers -- that make up the community of entrepreneurs dedicated to creating the green companies of the future, and the jobs that go with them.

But as clear as that statement may be, the signals from Washington today are decidedly mixed. Under the umbrella of financial reform, lawmakers are considering sweeping regulation that threatens the very infrastructure that supports and nurtures this community, and turns ideas and fledgling companies into real engines of growth and job creation.

Buried in the 1336 pages of the "Restoring Financial Stability Act" are overlooked provisions that could have devastating consequences not just for nascent green technology companies, but for the entire startup community as a whole.

The two key changes would require small startup companies to register with the SEC and then wait 120 days for the filing to be reviewed, as well as sharply raise the qualifications for those who wish to invest in these enterprises, excluding all but the truly wealthy. In addition, the law rolls back some Federal preemption of securities laws, potentially leading to a state by state patchwork of regulation.

These changes are misguided. America's technological dominance has been a remarkable feat in an increasingly competitive world. Our continued ability to lead the world in innovation is a linchpin of our economy.

The U.S. hardly has a monopoly on scientists or information technology experts, nor engineering and management talent. Yet each year thousands flock from around the world to our shores, and seek out our high tech hubs, places like Silicon Valley, Austin, Boston, Chapel Hill, or New York City.

Why? Well for starters, the U.S has a truly breathtaking competitive advantage as fertile ground for innovative startup companies spanning all facets of technology. From software and the internet -- to greentech and cleantech. At every step of the process an entrepreneur with a great idea or a viable plan can find the infrastructure they need to get off the ground and build world changing companies. And no other nation has a robust angel community to give these entrepreneurs their start.

A large percentage of cleantech companies in the US have found their initial backing among angel investors or other private seed money, with a comparatively small number founded via government grants. Contrary to public impression, clean technology innovation in the US remains a grassroots effort with small teams working informally, even in the proverbial entrepreneur's garage. Couple this with minimal venture investment in the sector, (nearly $6 billion in 2009 in an industry needing around $3 trillion), and nearly no involvement from investment banks and major financial institutions, and it's clear today's cleantech startups are heavily reliant on angel investment. Our company, Belgrave Trust, has been supported by angel investment to date, and our hope is to become a sustainable business through angel investment.

But -- disconcertingly -- with the stroke of a pen, the pending financial reform package threatens to make it nearly impossible for tech and green startups like ours to pass their most crucial and fragile stage of growth. Nearly every city and every sector has a community of "angel" investors who provide crucial capital and support to bridge the gap between an idea or business plan and a viable company ready for institutional investment.

Many of these investors (who typically each provide early stage funds in the range of $25k-$100k) are themselves entrepreneurs who have had previous success, and bring not only funds, but also contacts and expertise. Many consider angel investment their primary occupation, and make ten or more modest investments each year.

This group may not make the headlines like Goldman Sachs or AIG, but it's an organized tradition that goes back decades, and ranges from individuals to formal organizations such as the New York Angels or The Angels Forum in California. The amounts raised are often tiny by the standards of our financial system,but these early boosts provide the crucial resources that enable startups to reach initial targets, create prototypes, find customers, and realize their potential.

Under the new bill the required financial means for investors could suddenly more than double. While there is no hard data as to what percentage of investors will be affected, data from that same government study suggests that as many as 80% of current angels may not qualify.

The bill's other provision, requiring SEC registration and a 120 day waiting period, seems almost totally out of touch with the realities of the fast moving startup world. Consider Hotmail, which opened for business as an total unknown on July 4th, 1996 and was acquired by Microsoft for approximately $400 million just seventeen months later. A three month waiting period for many startup companies might as well be a death sentence.

How fast should innovation take place? How quickly should we channel resources to the inventor of the next breakthrough in renewable energy, greenhouse gas reduction, or clean transportation? Which entrepreneurs "taking a chance on a dream" will find themselves unable to partner with the investment community that's helped drive this country's robust technology infrastructure and made us a world leader? And shouldn't individuals, i.e. angels have the freedom to choose how they invest their own money?

This is not an argument against regulation -- in fact it's overwhelmingly clear that increased financial oversight is needed following a series of crises that spawned a global downturn.

But as we clean let's remember there's a baby in that bath water, and we must insist that our vibrant and world-leading support system for innovators and entrepreneurs isn't tossed out carelessly.

In order for the US to "lead the global economy" our nation depends on it.