Rep. Bill Huizenga
Legislation that would make it easier for startup companies to attract investments that allow them to grow and create jobs passed the House with support from U.S. Rep. Bill Huizenga (R-MI).
The Helping Angels Lead our Startups (HALOS) Act, H.R. 79, would remove regulatory barriers that prevent angel investors from injecting capital into small business startups.
The bill would clarify the definition of general solicitation under federal securities law to help build support for startups. The bill also defines an “angel investor group” and allows these investors to attend presentations with entrepreneurs where they can pitch their ideas. It would clarify a Securities and Exchange Commission ruling that put restrictions on attendance at such events.
“Small businesses helped create more than 60 percent of the nation’s net new jobs over the past two decades,” Huizenga, the chairman of the House Financial Services Subcommittee on Capital Markets, and Government Sponsored Enterprises, said. “So, if our nation is going to have an economy that provides opportunities for every American, then we must promote and encourage the success and growth of our small businesses and startups.”
Small business startups need capital and credit — the lifeblood of growth, expansion and job creation — but the government constructs “arbitrary walls” that prevent them from securing essential financing, Huizenga said.
Major companies such as Costco, Facebook, Google and Starbucks were initially funded by angel investors.
“Our goal in government should never be to stop the next Uber, Apple, or Amazon from coming into existence,” said House Majority Leader Kevin McCarthy (R-CA). “We should enable it. One of the goals of the Innovation Initiative is to tear down government-made barriers to success and embrace the ideas that will keep America as the global leader in innovation.”
The HALOS bill is part of a larger Innovation Initiative in the House that focuses on advancing policy solutions that will foster more private-sector innovation and job growth.
By eliminating arbitrary rules and allowing angel investors to play a bigger role in funding startups, those entrepreneurs will gain access to the capital they need to stay afloat and grow, McCarthy added.
Huizenga said the SEC has restricted startups from interacting with angel investors at ‘Demo Days’ and similar pitch events. He views the HALOS Act as a bipartisan, bicameral way to provide startups the ability to interact with angel investors, ultimately helping startups secure financing, grow and create jobs.
The House approved the HALOS Act on Tuesday with a vote of 344-73.