Vote Explanation for H.R. 1219 — Supporting America’s Innovators Act of 2017
At a time when the rate of new business growth in our country is at its lowest point in decades, I was pleased to see H.R. 1219, the Supporting America’s Innovators Act of 2017, pass with overwhelming bipartisan support.
This legislation would increase the number of accredited investors who can invest in certain venture capital funds from 100 to 250 before those funds must register with the Securities and Exchange Commission as “investment companies.” Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential.
Under current law, if more than 100 people want to invest in a venture capital fund, the fund is forced to exclude some of them from the deal to avoid registration and regulation as an “investment company.” That means investors looking to provide capital are being turned away and startups are losing out on important early stage funding. The 100-investor threshold has been in place since 1940, when it was established under the Investment Company Act.
By updating this exemption through raising the number of investors from 100 to 250, this bill helps to further promote capital formation at the earliest stages of a business’s life-cycle. That is why I was proud to support this important, bipartisan legislation.