U.S. Rep. Patrick McHenry (R-NC) introduced legislation in the House last week to boost investments in small businesses and startups, particularly in rural areas.
Supporting America’s Innovators Act of 2017 would amend the Investment Company Act of 1940 by increasing the investor limitation from 100 to 205 people for venture capital funds. This measure is designed to incentivize venture capital funds to grow their investments in entrepreneurs in rural areas.
Venture capitalists are often deterred from establishing funds in rural areas or places where smaller-dollar investors are more common because they don’t want to violate the Securities and Exchange Commission’s (SEC) limit of 100 investors to register a fund.
Getting that initial seed funding is primary hurdle for small businesses in these areas. Supporting America’s Innovators Act would address this problem.
“Small businesses drive our economy and create jobs, but have suffered the most in recent years,” McHenry said. “With small business lending down, we need to pursue policy that encourages greater innovation in capital formation and allows American to invest in each other. The Supporting America’s Innovators Act does that and I’m proud to join with a bipartisan, bicameral group to introduce this important bill.”
The bill was co-sponsored by Rep. Nidia Velasquez (D-NY). It also has the support of U.S. Sens. Heidi Heitkamp (D-ND) and Dean Heller (R-NV)
“Rural-state entrepreneurs shouldn’t be precluded from investment opportunities in their startups or small businesses, but when the U.S. Security and Exchange Commission limits accredited investors to 100 before registration with the agency is required – which doesn’t take long in rural areas where small-dollar investments are more common – that’s exactly what’s happening, and it’s time to level the playing field. By removing roadblocks to venture capital investments, we can help grow opportunities rural-state small businesses and startups need to thrive,” Heitkamp said.
Heller said the bill would give job creators access to capital they need to grow.
“Nevadans are tired of Washington limiting innovation and holding back our economy, and this proposal is another way to curb excessive government interference while supporting entrepreneurship,” Heller said.