WASHINGTON, DC – The National Venture Capital Association (NVCA) today recommended key changes to the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2017 on behalf of the entrepreneurial ecosystem. NVCA submitted its views on the legislation in a submission to the House Financial Services Committee in connection with its hearing on “H.R. 4311, the Foreign Investment Risk Review Modernization Act of 2017.”
FIRRMA expands the mandate of the Committee on Foreign Investment in the United States (CFIUS) to review minority investments into U.S. critical technology companies, unless the investment is a passive investment. NVCA is recommending key changes be made to FIRRMA that maintain the intent of the bill but mitigate damage to U.S. startups that need capital to grow.
In its submission, NVCA details changes to FIRRMA in four key areas: (1) amend the passive investment exemption to reflect true passivity; (2) expand the universe of exempted countries to include additional U.S. allies and better focus CFIUS’s attention; (3) provide better direction to CFIUS on the meaning of critical technology, lest the legislation pull in broad swaths of the American economy; and (4) enact changes that do not stifle foreign strategic investors that have become a key aspect of startup financing.
“The reality is investors now have a world of choices on where to deploy capital. Policymakers must ensure the U.S. remains the most attractive destination in the world for new company formation so we can continue to experience the benefits of entrepreneurship,” writes Bobby Franklin, President and CEO of NVCA. “If we fail in this regard, other countries stand ready to take advantage of obstacles we put in place to the free flow of risk capital. It is therefore imperative that as FIRRMA is considered that policymakers are sensitive to its impact on investment in startups.”