FOR IMMEDIATE RELEASE
April 5, 2022
WASHINGTON, DC – NVCA strongly supports provisions in the newly announced JOBS Act 4.0 package that facilitate capital formation and make the public markets more attractive for innovative young companies.
“Innovative corporate challengers are the lifeblood of the American economy,” said NVCA President & CEO Bobby Franklin. “This legislative package contains a range of provisions that will accelerate the growth of new U.S. companies, encourage more companies to enter and remain in the public markets, and create more American jobs.”
The legislation from Senate Banking Committee Republicans will support capital formation for companies at all stages, improving the success rate for high growth companies which will fuel American made innovation and economic opportunities across the country.
NVCA is particularly thrilled to see the Developing and Empowering our Aspiring Leaders (DEAL) Act included in this package, a longtime legislative priority that will improve returns and capital formation in the initial stages of the startup ecosystem. Authored by Senator Mike Rounds (R-SD), the DEAL Act will allow venture capital funds to acquire more shares from founders, angel, and seed stage investors, and provide capital to emerging VC funds, without triggering the costs and burdens of fund registration. These early-stage investors will then be able to recycle their gains into the next generation of new American companies.
“A decade after passage of the Jumpstart our Business Startups (JOBS) Act, we are excited to see that Congress is serious about leveraging this success to foster more opportunities for emerging businesses who create the economy and jobs of the future,” Franklin continued. “We thank Senator Toomey and his colleagues for their leadership and commitment to creating more economic opportunity and competition in the U.S. economy.”
- Venture capital builds the product for the IPO pipeline. Research shows that the VC industry backs around half of companies that go public each year, and three-quarters of the largest U.S. VC-backed companies would not have existed or achieved their current scale without an active VC industry.
- Further, public companies originally built with venture capital financing account for 92 percent of R&D spending undertaken by all public companies founded within the last fifty years.
- Unfortunately, the public markets have become more hostile to small companies due to a range of factors, including excessive regulatory and disclosure costs, issues with depressed research coverage and liquidity, and a culture of short-termism that is incompatible with the multi-year nature of many technology projects undertaken by VC-backed companies.
- Several provisions in the package would address reducing the cost of being a public company and improving research coverage and liquidity for small companies.
- In addition, other provisions including the DEAL Act, would improve capital formation in the early-stage ecosystem.
About National Venture Capital Association
The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the U.S. venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about the NVCA, please visit www.nvca.org.
Robin Ceppos2022-04-05 10:00:032022-04-05 09:58:13New JOBS Act 4.0 Boosts the Next Generation of High Growth American Companies