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Will Limit on Investors for Angel Funds Increase?

By Stephen Barlas
June 2, 2017
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The House recently passed a bill that will make it easier for angel investors to pump capital into small businesses. The Senate is now considering the same exact bill, called the Supporting America’s Innovators Act, which passed the House by a vote of 417-3 on April 6, 2017. The bill updates a nearly 80-year-old regulatory requirement for certain venture capital funds to register with the U.S. Securities & Exchange Commission (SEC) if more than 100 individuals invest in them.

 

The bill increases the limit from 100 to 250, a change that would permit angel and venture funds to better help accredited investors invest in small business startups. The new upper limit would apply to “qualifying venture capital funds,” meaning those that don’t purchase more than $10 million in invested capital of any one issuer, adjusted for inflation. The bill is being sponsored in the Senate by Sen. Heidi Heitkamp (D.-N.D.).

 

It passed the Senate Committee on Banking, Housing, and Urban Affairs on March 13, 2017, and is waiting for full Senate action. Jack Howard, senior vice president of congressional and public affairs with the U.S. Chamber of Commerce, says, “This fix is particularly necessary as provisions under the JOBS Act have provided more opportunities for companies to raise capital through private channels, causing more funds to bump up against the current SEC registration tripwire.”

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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