Expanding Access to Capital Act of 2023

Floor Speech

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Mr. McHENRY. 2799.

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Mr. McHENRY. Mr. Chair, I yield myself such time as I may consume.

Mr. Chair, 40 years ago, my father started a small business in our backyard. Growing up in Gastonia, North Carolina, being the youngest of five kids, my father started a small business with his friend, who also had five kids. It didn't change the world and it was just a lawn mowing business. We mowed other people's grass, and that is what put two families through school, provided for two families, and eventually provided for many others as they scaled up and grew the business.

While my dad's small business didn't change the world, it certainly changed my world and our family's world.

Like other entrepreneurs, though, my dad needed access to affordable capital to scale his business. When other sources of opportunities for lending of capital dried up, he relied on a charge card, which we now call a credit card, to grow his business and to start employing other folks.

This story isn't unique to my family. We see this playing out across the country today. Entrepreneurs with new ideas or who are seeking to grow their businesses are struggling to access affordable credit and affordable capital. That means that they are not given the same opportunity to change their lives, their family's lives, or their community.

This is a loss for all of us. It is a loss for American innovation. That is where investment capital and this bill come in to help more entrepreneurs realize their version of the American Dream.

Currently, the venture capital that funds startups are concentrated in traditional financial hubs, like Silicon Valley, Boston, and New York City. Those three cities of the country account for almost three- quarters of all venture funding.

Now, that is not for every business, but it is a very specific group of startups. This Congress and our committee heard compelling testimony from folks across the ideological spectrum who urged us to make it easier for them to raise money from nontraditional sources.

This would allow them not only to build their funds and deploy more capital, but also share their financial success within their community.

This bill, the Expanding Access to Capital Act, does just that and more by alleviating the unique fundraising challenges faced by entrepreneurs and their investors who don't live in Silicon Valley.

This bill will also make improvements to our public markets and create new opportunities for everyday investors to save and build wealth and enjoy their version of the American Dream.

This form of capital formation is a critical ingredient for creating long-term economic growth that has proven enduring here in the United States. Not to mention, it has traditionally been an area where a divided Washington can find consensus.

A little more than a decade ago, Congress came together to pass the JOBS Act, which President Obama then signed into law. It was a Republican House, a Democrat Senate, and a Democrat in the White House who put that historic piece of legislation through the process and into law.

It addressed several hurdles entering our capital markets by rightsizing onerous regulatory barriers and providing entrepreneurs access to new levels and streams of funding.

Recognizing the need to build on the success of the JOBS Act, the House Financial Services Committee embarked on a yearslong mission to better understand the remaining headwinds hindering capital formation and legislate real and impactful solutions.

Many of those solutions are found in this legislation we are considering today, which consist of commonsense, innovative ideas to accomplish three goals: First, the bill strengthens our public markets and aims to incentivize companies to go public, undoing the troubling decline of initial public offerings here in the United States, or IPOs. IPOs are businesses that average everyday investors can own a piece of.

Why is it important that we attract more companies to the public markets in the United States?

One, everyday American investors, also known as retail investors, are limited to investing in publicly traded companies. Most public companies here in the United States that are of large size and scale should be available in the public markets. More public companies here in the United States means more opportunities for the American retail investor to grow their savings.

Number two, job growth. A 2021 study found that biotech startups expand their workforce by an average of 150 percent in the first 3 years after undertaking an initial public offering using the JOBS Act provisions.

To make our public markets more attractive, H.R. 2799, this bill, includes provisions that rightsize regulatory burdens on public companies, streamline the process of going public, and allow more companies to qualify as an emerging growth company.

This is an extension of more key provisions within the bipartisan JOBS Act that have a proven record of success.

Second, as I said earlier, this legislation supports small businesses and entrepreneurs who are the true engine of our economy and account for 99.9 percent of all U.S. businesses.

Among other policies, this bill allows small businesses to raise more money through offerings. It also addresses limitations on small, emerging venture fund managers attempting to raise and deploy capital to startups and entrepreneurs in their communities.

Third, this bill increases access to private markets and allows more Americans to participate in high-growth investment opportunities that have been traditionally reserved for the wealthy elite.

Currently, these investment opportunities are reserved for those qualifying as ``accredited investors,'' which dictates what a person can invest in based off their wealth or income.

We should all agree that wealth and income should not be a proxy for sophistication, especially if investors have expertise or experience that prepares them to invest in private offerings.

This bill includes provisions to expand the accredited investor definition, allowing everyday Americans to invest where they see opportunities and where they have expertise. That means new wealth- building opportunities for American investors who have been arbitrarily sidelined for too long.

Now, these private markets, that is where we have had the fastest growing businesses. The greatest wealth creation is ownership in these private markets. We want to link that up for all Americans to have that opportunity to invest in those markets where they have expertise.

Let me close with this: Capital formation should not be a partisan issue.

This legislation builds on the success of the bipartisan JOBS Act and will benefit Americans in every single one of our districts, either by growing their retirement savings or through job creation and economic growth in their community.

This bill is a compilation of several standalone bills introduced by numerous members of the Financial Services Committee, under the great leadership of our subcommittee chair on Capital Markets, Ann Wagner of Missouri.

There are many Members that I wish to recognize, but it would take too long at this time to go through all of their great work; however, it is embodied in this bill before us today.

I am grateful for the opportunity to be here on the House floor, and I am grateful to the House Republican leadership that have prioritized this help for small businesses and our legislative work in the Financial Services Committee. I think we can see that we all want to be unified in helping the American people achieve their dreams in the way they see fit. For small business folks that want to start a small business, we need to make things easier for them, not harder. This bill makes it better for them and easier for them.

Mr. Chair, I yield to the gentlewoman from Missouri (Mrs. Wagner) to control the balance of my time.

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