By: Jake Clabaugh, WIPP Government Relations
If you are an entrepreneur seeking capital, the path to venture funding could be getting a little easier. Earlier this month, the House Financial Services Committee took action on two bills that make venture investments more attainable for entrepreneurs – The Helping Angels Lead Our Startups (HALOS) Act and the Main Street Growth Act. As women entrepreneurs only receive 7% of venture dollars, improving access to venture capital is a top priority in the women’s business community.
Due to ambiguities in the law, pitch events or demo days that are sponsored by angel investors may or may not be legal. Yet, these events are a great opportunity for entrepreneurs to get themselves – and their products – in front of a room full of potential investors. The HALOS Act makes this easier by clarifying this ambiguity. Currently, the Securities and Exchange Commission (SEC) prohibits “general advertising” and “general solicitation,” but the HALOS act would clarify that these events are permitted for groups of angel investors and not subject to the prohibition on general solicitations. The bill’s sponsor, House Small Business Committee Chair Steve Chabot (R-OH), remarked, “clarifying the law to give entrepreneurs and investors more certainty and opportunity is a step in the right direction.”
To further incentivize investment, The Main Street Growth Act (H.R. 4638) will create securities exchanges specifically for venture capital investments. Existing stock exchanges could create a new tier to specialize in venture capital investments or entirely new exchanges could be established. These securities exchanges will bring together buyers and sellers of venture capital and create a more liquid market, which will incentivize investors to support startups.
While no single policy change or piece of legislation will break down the barriers that prevent women entrepreneurs from accessing capital, these incremental improvements show that Congress is committed to leveling the playing field for women entrepreneurs. WIPP’s access to capital platform, Breaking the Bank, continues to gain traction with legislators and WIPP is dedicated to growing women entrepreneurs’ share of venture capital funding.