WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that the “American Innovation Act of 2018” includes a proposal to protect the net operating losses (NOLs) of startups. The proposal would allow startups to carry forward their losses and R&D tax credits accrued in the company’s first three years of existence without regard to Section 382 of the tax code, which currently can create an unintentional tax penalty for startups. Startups often accumulate NOLs when using investment capital to try and build a successful company. These NOLs most often are related to research and development and hiring, activities that public policy separately seeks to encourage. However, the Section 382 rules often do not allow startups to carry forward their NOLs, essentially penalizing startups for investing in innovation since they serve as assets on a company’s balance sheet. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) applauds today’s passage of the JOBS and Investor Confidence Act of 2018 in the U.S. House of Representatives by an overwhelming bipartisan vote of 406-4. The bill includes a number of provisions that will support capital formation for U.S. growth companies. These pro-innovation provisions include relief for many venture capital firms from having to become Registered Investment Advisors (RIAs), a designation that was not intended for VC firms and which adds a number of costs and challenges for VC firms. Even firms that do not have to register often need to manage their portfolio and limit or refrain from certain investments to avoid the regulatory morass of registration. (more…)
The DEAL Act Would Improve Access to Capital for U.S. Startups
WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that today the U.S. House Committee on Financial Services passed the Developing and Empowering our Aspiring Leaders (DEAL) Act by a voice vote. Sponsored by Representative Trey Hollingsworth (R-IN), the DEAL Act will encourage capital formation for startups by directing the Securities and Exchange Commission (SEC) to make a percentage of secondary investments qualifying for purposes of the definition of a venture capital (VC) fund. The modification would be limited in scope to equity investment by venture capital funds, activity that is generally a bipartisan priority. This bill would improve the ability of VC funds to continue to follow their portfolio companies along their growth path through more follow-on investments without fear of triggering a significant regulatory burden. (more…)
Sustained Momentum in Venture Fundraising Continued to Fuel Strong Dealmaking Across All Stages in 2018; Exit Market Showed Signs of Improvement with IPO Count on Track to Become Second Best Year since 2000
SEATTLE, WA – Investment in 3,912 venture-backed companies reached $57.5 billion invested across 3,997 deals in the first half of 2018, according to the PitchBook-NVCA Venture Monitor, the authoritative quarterly report on venture capital activity in the entrepreneurial ecosystem jointly produced by PitchBook and the National Venture Capital Association (NVCA). At this pace, venture investment is expected to meet or exceed capital invested in 2017, which saw the highest amount of capital deployed to the entrepreneurial ecosystem since the dot com era (early 2000’s). Deal value was driven in part by investment in late-stage companies and unicorns, however, deal sizes increased across all stages. This is most notable in the angel and seed stage, which has been boosted by the emergence of pre-seed financings. These pre-seed rounds allowed for more mature business models by the time of initial seed rounds, naturally leading to larger deal sizes. Additionally, the venture exit market remained healthy in the first half of 2018 and is expected to continue improving with several unicorns poised for exits. Venture fundraising also remained strong, especially for first time fund managers with niche or regional strategies. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) filed comments today to the Department of Homeland Security (DHS) arguing against the department’s proposed rescission of the International Entrepreneur Rule (IER), which would allow for talented immigrant entrepreneurs to remain in the United States to build and scale their startups. NVCA argues in its comments that rescinding the IER program would prevent the U.S. from realizing the substantial economic and security benefits that locating new startup companies in the U.S. would provide.
“NVCA is proud to once again lead the charge to support immigrant entrepreneurs,” said Bobby Franklin, President and CEO of NVCA. “Our comments in support of the International Entrepreneur Rule reflect the incredible contributions of foreign-born entrepreneurs and how they are working in partnership with venture capitalists to solve the world’s most challenging problems, whether in technology, healthcare, science, or many other areas. In addition, our comments demonstrate that the administration relies on unsupported assertions and arguments in justifying removal of the International Entrepreneur Rule.” (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that today’s proposal from the Federal Reserve to simplify the Volcker Rule includes questions on whether the rule’s exclusion of banks from investing into U.S. venture capital funds should be revised. Currently, the Volcker Rule prohibits U.S. financial institutions from investing into venture capital funds as limited partners. This has had a disproportionate impact on cities and regions with emerging entrepreneurial ecosystems—areas outside of Silicon Valley and other traditional technology centers. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement today after the Department of Homeland Security (DHS) proposed to rescind the International Entrepreneur Rule, which would allow for talented immigrant entrepreneurs to remain in the U.S. to build and scale their startups.
“The startup and venture community is very disappointed with DHS’s short-sighted decision to turn away American jobs that would be created by the International Entrepreneur Rule,” said Bobby Franklin, President and CEO of NVCA. “The facts are clear: our country needs more entrepreneurship, which is exactly what the International Entrepreneur Rule would bring. We will continue to explain to the administration why immigrant entrepreneurship benefits our country and must be supported by policymakers.” (more…)
Borisy Will Serve as 2018-2019 Chair and the Seven New Directors Will Serve Four-Year Terms
WASHINGTON, DC – The National Venture Capital Association (NVCA) today announced that Alexis Borisy, Partner at Third Rock Ventures, will serve as the 2018-2019 Chair of the NVCA Board of Directors. His appointment was made official at NVCA’s VCs-to-DC event in Washington, D.C., which doubles as the NVCA Annual Meeting.
“We are excited about Alexis becoming Chair of the NVCA Board of Directors,” said Bobby Franklin, President and CEO of NVCA. “He becomes Chair at an important time for the organization and its advocacy work. With the global competition for startups and venture investment continuing to intensify, the need for policies that make the U.S. the most attractive place to start and grow companies is more important than ever. As Chair, Borisy will be a crucial leader for NVCA in advancing these policies and representing the interests of our members and the entire entrepreneurial ecosystem.” (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA), entrepreneurs, and startup companies today filed a motion to conduct discovery regarding the Department of Homeland Security’s (DHS) compliance with the court order in NVCA v. Duke. In that case, the U.S. District Court for the District of Columbia ordered DHS to implement the International Entrepreneur Rule (IER). NVCA and the other plaintiffs have grave concerns that DHS has chosen to disregard the court’s previous order. DHS has failed to take action on IER applications, including the applications of the plaintiffs. Troublingly, DHS has made public statements suggesting it is not implementing the IER. The motion to conduct discovery is essential to ensure the court’s decision is fully implemented to allow IER to move forward.
“The federal court’s ruling in NVCA v. Duke was clear: DHS’s delay of the International Entrepreneur Rule was unlawful and the rule must be implemented,” said Bobby Franklin, President and CEO of NVCA. “Unfortunately, DHS has dragged its feet and even tried to persuade immigrant entrepreneurs to not launch new high-growth startups through the International Entrepreneur Rule. The venture capital industry believes the International Entrepreneur Rule will create American jobs by attracting the world’s top startup founders. Our industry is committed to seeing the rule implemented and will continue to advocate for this powerful job-creation tool.” (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) today joined with the U.S. Chamber of Commerce and other organizations to release “Expanding The On-Ramp: Recommendations to Help More Companies Go and Stay Public,” a report providing public policy recommendations to encourage more U.S. public companies. The report was produced in partnership with a number of organizations, including The Center for Capital Markets Competitiveness, Nasdaq, TechNet, SIFMA, Biotechnology Innovation Organization, American Securities Association and Equity Dealers of America.
The recommendations in the report provide a blueprint for policymakers to address the challenges to both launching IPOs and remaining a public company. The policy recommendations include enhancements to the reforms put in place by the JOBS Act, proposals to encourage more research of emerging growth companies (EGCs), improvements to corporate governance, disclosure, financial reporting and regulatory requirements, and enhancements to equity market structure. (more…)