U.S. Rep. Trey Hollingsworth (R-IN) introduced Tuesday a bill to encourage more investment from venture capital firms in startups and small businesses.
The Developing and Encouraging our Aspiring Leaders (DEAL) Act (H.R. 4227) requires 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. It would allow venture capital funds to provide necessary growth capital as those companies go public without registering as a registered investment adviser.
“After a strenuous year, we should encourage more investment in local startups and small businesses,” Hollingsworth said. “Access to capital is a key component for Hoosier businesses to grow, hire more employees, and contribute to our communities.”
Including broader equity securities as part of a qualifying investment was recently recommended by the SEC’s nonpartisan Small Business Capital Formation Advisory Committee. It has been endorsed by the National Venture Capital Association (NVCA).
“NVCA is thrilled to see the reintroduction of the Developing and Empowering our Aspiring Leaders (DEAL) Act. The bill would encourage more equity investment into U.S. startups in communities across the country by improving the ability of VC funds to seed emerging fund managers and continue to invest in their portfolio companies as they grow,” Bobby Franklin, president and CEO of the NVCA, said. “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.”