Today, U.S. Senator Chris Murphy (D-Conn.) joined U.S. Senators John Thune (R-S.D.), Pat Toomey (R-Pa.) and Brian Schatz (D-Hawaii), as well as U.S. Congressmen Brad Schneider (D-Ill.) and Steve Chabot (R-Ohio) to introduce legislation that would remove burdensome restrictions from individuals who want to invest in startups. In order for a startup to secure capital to grow the business, entrepreneurs commonly attend "demo days", which are conferences that allow startups to showcase their business model in front of valuable startup investors, such as "angel investors" -- investors in startup companies -- and venture capitalists. New Securities and Exchange Commission (SEC) regulations, initiated by the JOBS Act, have put angel investors participating in demo days at risk of being forced to turn over extensive personal financial details to an onerous new third-party vetting process. This invasion of privacy deters many investors from backing startups when they need support to grow their businesses the most.
The Helping Angels Lead Our Startups (HALOS) Act would lift this burdensome restriction and instead preserve the same investor vetting process that angel investors have been using at demo days for years. By removing these restrictions, the HALOS Act will allow startups to continue to get the investments they need to grow the business and create jobs.
Startups are critical to the future of America's economy. In 2010, companies in their first year created an average of 3 million jobs, and it is estimated that angel investors provide 90 percent of outside equity to help grow these young businesses. The HALOS Act would help angel investors support these companies and good, new jobs in thousands of new startups.
Murphy has held a series of roundtable discussions with entrepreneurs and angel investors throughout Connecticut to get their feedback on what support they need from the federal government to help create startup jobs. Most recently, he visited with entrepreneurs at Stamford Innovations and The Grove in New Haven. This legislation was developed with their feedback.
"We should be doing everything we can to support small businesses in this country, especially those with high-growth potential," said Murphy. "I've travelled around Connecticut and have heard from investors and entrepreneurs alike that the most important thing we can do to create new startup jobs is to make it easier for angel investors to put capital behind these nascent companies. The bipartisan HALOS Act will allow angels to more easily invest in startups at a demo day, which is one of the best opportunities startups have to showcase their business. I urge my colleagues to back this jobs bill so that we can create better business opportunities in Connecticut and across the country."
"With nearly 10 million Americans currently unemployed, we ought to be doing everything we can in Congress to enact policies that help create jobs," said Thune. "Small businesses and startups are the backbone of our economy. The bipartisan HALOS Act continues in the spirit of the JOBS Act we signed into law in 2012 and will help entrepreneurs and investors continue to create small businesses and jobs throughout the country."
"I started a chain of restaurants in Allentown in 1990 with two of my brothers," said Toomey. "We used our own savings to fund the start-up costs and worked day and night and eventually created hundreds of jobs in the Allentown and Lancaster region. So I understand the unique struggles, uncertainties, and risks involved in starting one's own business. We can make it easier to be innovative. I am pleased to join with Sens. Murphy, Thune, and Schatz, and our colleagues in the House to propose a bill that will make it easier for startups and angel investors to connect and work together to grow their businesses and hire more workers."
"Hawai"i's unique location and creative environment make it an ideal place for tourism, defense, energy, and technology startups but, right now, unnecessary restrictions are holding back our startups," Schatz said. "Our bill makes it easier for angel investors to fund Hawai"i startups that help grow our local economy and create jobs."
"One of our top priorities in Washington needs to be making it easier for entrepreneurs and small businesses to access the private capital they need to grow, innovate and create jobs," said Chabot. "The last thing we should do is place new roadblocks in the way of investors looking to provide much-needed capital to startups. Unfortunately, that is exactly what new rules from the SEC would do. The HALOS Act is a bipartisan, bicameral effort to clarify these rules and preserve important forums like "demo days,' so that our startup community can continue to showcase their ideas to key investors, investors to whom they may have little or no access otherwise."
"As startup businesses look for capital, they frequently rely on demo and pitch days -- events where entrepreneurs can introduce their business ideas to potential investors to raise capital," Schneider said. "However, recent regulation has had the unintended effect of preventing startups from participating in these important events. The HALOS Act helps fix this problem, allowing entrepreneurs and investors to connect more easily while still preserving crucial investor protections."
The Angel Capital Association said, "Thank you to the cosponsors for their work on the HALOS bill. Demo days are important not only for accredited investors and entrepreneurs to connect, but they also help educate entrepreneurs and students on how to start and fund their businesses and they are critical to economic development initiatives across the country. Angel Capital Association member angels join venture capitalists and other experts in mentoring the startups that participate in university business plan competitions, statewide innovation forums and other demo days. Continuing these events without additional red tape is important to job creation and innovation in the U.S."