House passes startup-friendly bills as part of ‘innovation initiative’

Tuesday was a good legislative day for Silicon Valley.

The House passed two bills designed to make it easier for startups to raise funding, pushing full steam ahead on the “Innovation Initiative” spearheaded by House Majority Leader Kevin McCarthy and Chief Deputy Whip Patrick McHenry.

The first, the “Fix Crowdfunding Act,” loosens restrictions for equity crowdfunding. It received an overwhelming majority — passing 394-4, The Hill reported. The bill would amend prior rules that went into effect in May — expanding equity crowdfunding even further. Before the May rule change, startups seeking to raise money via crowdfunding were mostly restricted to platforms like Kickstarter, where they could offer donors T-shirts and other swag, but not equity in their company.

Crowdfunding, both with and without the promise of equity, has become a popular method for early-stage startups to raise capital. In 2014 crowdfunding campaigns raised $9.46 billion in North America, and the industry had an annual growth rate of 145 percent, according to a study published last year by crowdsourcing research and advisory firm Massolution.

The second bill to pass in the House on Tuesday is the “Supporting America’s Innovators Act 0f 2016,” which would expand the limit on investors engaging in early-stage funding from 100 to 250, The Hill reported.

Both bills face their next test in the Senate.

Speaking on the House floor Tuesday, McCarthy said the bills are designed to restore the original spirit of the JOBS Act.

They are intended “to harness innovation and bring together millions of Americans with potential new businesses through crowdfunding,” he said. “These new businesses could become the next Apple or Under Armour. They could revitalize the most downtrodden communities who were hardest hit by the recession and faced the slowest recovery.”

The National Venture Capital Association cheered the passage of both bills Tuesday.

“Financial capital is the lifeblood of innovative, high growth startups,” President and CEO Bobby Franklin wrote in a news release. “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.”

Photo: In this 2011 fie photo the U.S. Capitol building is seen in Washington. (AP Photo/Pablo Martinez Monsivais, File)

Correction: The version of the bill that passed in the House did not increase the equity crowdfunding limit to $5 million, as this post previously stated.

 

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  • disqusisdangpoo

    I’m sure glad they fixed these serious problems instead of wasting time funding social security, replacing obamacare with real government health care, building infrastructure for the future, and paying for those things by taxing the wealthy their fair share and cutting war spending.

    • David McDory

      government has no business of being in a health care business

      • disqusisdangpoo

        health care has no business being a business.

        profit is waste.

        • David McDory

          They should be regulated then, to bring the profits to a reasonably low level.

          Bureaucracy is a waste, and having a lot of doctors unmotivated, on the government payroll is also a waste.

  • Anthony Zeoli

    FYI, your information is incorrect. The form of the “Fix Crowdfunding Act” (HR 4855) that was passed was an amended version that did NOT increase the cap to $5 Million. It remains at $1 Million

 
 
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