NVCA Chair Testifies Before Senate Panel on CFIUS Reform Legislation

Recommend Improvements to FIRRMA to Avoid Unintended Consequences on Startup Investment

WASHINGTON, DC – At a congressional hearing today, NVCA Board Chair Scott Kupor, Managing Partner of Andreessen Horowitz, testified on the need to protect U.S. innovation, security and competitiveness, but cautioned lawmakers not to overlook the unintended consequences of proposed legislation to reform the Committee on Foreign Investment in the United States (CFIUS).  Testifying before the U.S. Senate Committee on Banking, Housing and Urban Affairs at a hearing entitled “CFIUS Reform: Examining the Essential Elements,” Kupor shared with lawmakers the fundamentals of venture capital investing as well its importance to the U.S. economy before outlining concerns with S. 2098 the Foreign Investment Risk Review Modernizations Act of 2017 (FIRRMA) and the unintended consequences it would have on venture capital and investment into innovative startups.

FIRRMA is well meaning legislation intended to deal with a real challenge. However, as drafted FIRRMA produces many questions about the filing obligations of U.S. venture capitalists when a fund has any amount of foreign LPs,” remarked Kupor in his prepared testimony.  (more…)

Record Unicorn Financings Drove 2017 Total Venture Capital Investments to $84 Billion, the Largest Amount Since Dot-Com Era

2017 Was a Banner Year for Venture Capital, Marked by Record Fundraising and Unicorn Investment Activity and Exits, According to the PitchBook-NVCA Venture Monitor

SEATTLE, WA The U.S. venture capital (VC) industry finished strong in 2017 with $84 billion invested in 8,035 companies across 8,076 deals, the highest annual amount of capital deployed to the entrepreneurial ecosystem since the early 2000’s, according to the PitchBook-NVCA Venture Monitor. Over the past several years, the VC industry has evolved as VC-backed companies stay private longer and command larger deal sizes. With fewer transactions yet more capital deployed into higher valued companies, deal counts dropped to the lowest figure since 2012, while median and average deal sizes reached a decade-high in 2017. Helping to drive this trend, Unicorns (i.e., VC-backed companies valued at $1 billion or more) alone raised $19.2 billion in capital, more than they have in any other year on record. This group also received a dramatically outsized portion of capital at 22.8% of total dollars, yet made up just 0.9% of deal volume. Boosted by 13 unicorn exits in 2017, overall VC exit value remained flat, despite a three-year decline in exit counts. Meanwhile, fundraising continued at a high clip as limited partners (LP) committed more than $32 billion to the asset class in 2017, bringing the trailing four-year total to $142 billion. (more…)

Tax Reform Package Preserves Key Priorities, More Work Remains to Reform Tax Code to Better Support Startups

WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement today after the U.S. Senate and House of Representatives passed the Republican tax reform package.  The bill now heads to the desk of President Trump for his expected signature to sign the legislation into law.

“We are pleased to see a number of our priorities reflected in the final bill, and appreciate the efforts of policymakers to understand how certain tax changes, such as taxing stock options at vesting, carried interest capital gains, the Qualified Small Business Stock rules and taxing graduate student tuition waivers, would have negatively impacted the entrepreneurial business model,” said Bobby Franklin, President and CEO of NVCA.  (more…)

NVCA Cheers Implementation of International Entrepreneur Rule, But More Work Remains

WASHINGTON, DC – The National Venture Capital Association (NVCA) today cheered an announcement from the U.S. Citizenship and Immigration Services (USCIS) that the agency would begin accepting applications under the International Entrepreneur Rule (IER).  The move comes in accordance with a recent court ruling in the case of National Venture Capital Association v. Duke challenging the delay of IER by the Department of Homeland Security (DHS).  On December 1, 2017, Judge James E. Boasberg of the U.S. District Court of the District of Columbia ruled in favor of the lawsuit brought by NVCA, entrepreneurs and startup companies challenging DHS’s delay of IER.  The court ruled in favor of the lawsuit on the grounds that because DHS did not solicit advance comment from the public on the delay, it violated clear requirements of the Administrative Procedure Act.  At the same time USCIS is beginning to accept applications of foreign-born entrepreneurs, DHS is proceeding with a notice of proposed rulemaking to eliminate IER, rendering implementation of the application process only temporary.

“At long last, the International Entrepreneur Rule is now taking effect, providing a pathway for foreign-born entrepreneurs to come to the U.S. to build their companies and make strong contributions to the U.S. economy.  Foreign-born entrepreneurs are critical to maintaining a strong and growing U.S. entrepreneurial ecosystem and we were proud to step up and represent their interests in fighting for implementation of IER,” said Bobby Franklin, President and CEO of NVCA. (more…)

Startups Need Strong Net Neutrality Protections

WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement today after the Federal Communications Commission (FCC) voted to repeal net neutrality rules.

“We are disappointed by today’s action by the FCC, which leaves high-growth startups without net neutrality protections in the marketplace,” said Bobby Franklin, President and CEO of NVCA. (more…)

Senate Passes Tax Reform Legislation Preserving Several NVCA Priorities

WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement today after the Senate passed H.R. 1, the Tax Cuts and Jobs Act.

“We have always viewed tax reform as an important opportunity to realign the tax code to better support entrepreneurship and spur new company formation.  While we would have preferred to see a section in tax reform dedicated to supporting entrepreneurship, it does preserve several provisions that are critical to the startup ecosystem,” said Bobby Franklin, President and CEO of NVCA.  (more…)

Judge Overturns DHS Delay of International Entrepreneur Rule

WASHINGTON, DC – Foreign entrepreneurs who want to build innovative companies in the U.S. received good news today when United States District Judge James E. Boasberg of the U.S. District Court for the District of Columbia ruled in favor of a lawsuit filed by the National Venture Capital Association (NVCA), entrepreneurs and startup companies on September 19, 2017 challenging the Department of Homeland Security’s (DHS) delay of the International Entrepreneur Rule (IER).  With this ruling, DHS is now compelled to dispense with its delay and begin accepting applications of foreign entrepreneurs who wish to come or stay in the U.S. to grow their companies.

“Today marks a significant victory for talented foreign entrepreneurs, the entrepreneurial ecosystem and the U.S. economy.  The facts speak for themselves—the U.S. economy has long thrived on the contributions and innovations of immigrant entrepreneurs and we are a better country as a result,” said Bobby Franklin, President and CEO of NVCA.  (more…)

House Advances Tax Bill with Several NVCA Tax Reform Priorities

WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement after the House of Representatives passed H.R. 1, the Tax Cuts and Jobs Act.

“Throughout the process we have been championing tax reform recommendations that would encourage new company formation, and we are pleased to see some of those incorporated into the House bill,” said Bobby Franklin, President and CEO of NVCA.  “Preservation of the Qualified Small Business Stock rules and the R&D credit payroll tax offset are key to ensuring a vibrant entrepreneurial ecosystem, and we appreciate lawmakers providing relief to startup employees that are unfairly hit with a tax bill on phantom income they haven’t yet received.   (more…)

NVCA Cheers Changes to Senate Tax Reform Legislation

WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement after the Senate Finance Committee dropped from its tax reform legislation language that would have wreaked havoc on the equity-based compensation system of startups.  In the modified mark of the Tax Cuts and Jobs Act released by Senate Finance Committee Chairman Orin Hatch (R-UT), the updated bill removed a provision that would have taxed stock options at vesting, which would have forced employees of emerging growth companies to pay taxes on income that has not yet been received and in some cases never realized.  In addition, the committee took the extra step of adding new language to the bill that would provide a deferral to emerging growth company employees that are forced to pay taxes on their exercised stock options without a market to sell them.

“The entrepreneurial ecosystem can breathe a sigh of relief.  After hearing our concerns, the Senate Finance Committee joined their House Ways and Means Committee colleagues in removing language from their respective bills that would have radically altered the equity-based compensation model that has been so fundamental to the success of the entrepreneurial ecosystem for decades,” said Bobby Franklin, President and CEO of NVCA.  (more…)

More Work Remains in Senate Tax Bill to Support Entrepreneurial Ecosystem

WASHINGTON, DC – The National Venture Capital Association (NVCA) today issued the following statement after Senate Republicans unveiled their draft tax reform legislation.

“Senate Republicans have taken an important first step to modernize the code with the introduction of their tax reform legislation, and we are encouraged to see the preservation of some important priorities for the entrepreneurial ecosystem,” said Bobby Franklin, President and CEO of NVCA. (more…)