U.S. Rep. Trey Hollingsworth (R-IN) recently sponsored legislation that would improve the ability of venture capital funds to seed emerging fund managers and continue to invest in their portfolio companies as they grow.
“After a strenuous year, we should encourage more investment in local startups and small businesses,” Rep. Hollingsworth said. “Access to capital is a key component for Hoosier businesses to grow, hire more employees, and contribute to our communities.”
If enacted, the Developing and Encouraging our Aspiring Leaders (DEAL) Act, H.R. 4227, would require the Securities and Exchange Commission (SEC) to expand the definition of a qualifying investment to include broader equity securities and venture capital investments in other funds, according to a bill summary provided by Rep. Hollingsworth’s staff.
Such a change would allow venture capital funds to provide necessary growth capital as those companies go public without having to register as a registered investment adviser, the summary says.
“The bill would encourage more equity investment into U.S. startups in communities across the country,” said Bobby Franklin, president and CEO of the National Venture Capital Association, who endorsed H.R. 4227. “This will result in more new high growth American companies that will help lead our economic recovery. We are grateful for Congressman Hollingsworth’s strong leadership and support of entrepreneurial investments and long-term company growth.”