H.R. 4854 included an exemption from the Investment Company Act by increasing the investor limitation for venture capital funds, from 100 to 250 persons.
H.R. 4855 relates to investment crowdfunding, made with the aim to fix the current perceived issues enacted on May 16 2016 under the Title III (Reg CF) of the JOBS Act.
The bill will permit the use of single purpose funds to participate in the sale and offer of crowdfunded securities. It will also clarify certain requirements under the Exchange Act 12(g), giving companies a longer period before having to comply with the pre-IPO documents required by the SEC.
“Small businesses and entrepreneurs are America’s true job creators [...] But today, they face a capital crisis. Small business lending from traditional banks is way down and America’s smallest communities are losing more jobs than they create." said Congressman Patrick McHenry.
“Today, the House passed two bills with strong bipartisan support that begin to confront this crisis, [...] Angel investing and investment crowdfunding are both innovative new forms of capital formation that—in the proper regulatory climate—can become vital tools for entrepreneurs and small businesses. My two bills help to ensure investment crowdfunding and angel investing reach their true potential.” added McHenry.
The news has been well-received by the vast majority of the actors in the market. Bobby Franklin, President and CEO of the National Venture Capital Association (NVCA) said:
“Financial capital is the lifeblood of innovative, high growth startups. We are pleased to see Congress focused on proposals to help startups access the capital they need to scale and hire new workers, which is critical for the entrepreneurial ecosystem and the American economy, [...] these measures are helpful and we are thankful for Congressman McHenry’s leadership.”
We agree that’s another good step forward towards a more open and accessible capital market in the US and that Congressman McHenry continues to drive a visionary role since 2011 when he started working on investment crowdfunding regulations. Great progress have been made since and there is now a good foundation and multiple opportunities, to deliver more efficient and effective finance services for new audiences.
The text of Supporting America’s Innovators Act of 2016’ (H.R. 4854) can be downloaded here.
While the text of the “‘Fix Crowdfunding Act” (H.R. 4855) is available here.
Image credit to: Benjamin Chan.
Alessandro is Co-founder & CMO of Crowd Valley. He has worked in the fintech industry, with marketplace investing and lending, since 2011. Has built and managed digital companies with distributed teams and international partners, and gained experience with both startups and large corporations, having worked with British Telecom, Bloomberg and the Grow VC Group.
Alessandro grew up in Italy, where he graduated with a B.A. in Economics at University of Parma, before to obtain a M.S. in Finance at Regent’s University London. He studied and worked in many different cities, including Munich, Geneva, London, Barcelona and Valencia. Genuinely passionate about financial technology and innovation, he loves to spend his spare time traveling and discovering new cultures. You can find him on Twitter at @aleravanetti.