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.
“The JOBS and Investor Confidence Act of 2018 is a broad-based approach to analyzing and improving the investment environment for American startups,” said Bobby Franklin, President and CEO of NVCA. “This bill will focus policy conversations in Washington on complex but critical issues for growth companies considering going public, reduce the cost of being a smaller public company, and improve the regulatory environment for startup investment. We applaud the leadership of the House Financial Services Committee for working together to build this important package and hope that today’s vote can give it necessary momentum for Senate consideration. I also want to thank Representative Hollingsworth for his leadership in advancing the DEAL Act, which is critical to the venture capital community.”
NVCA was particularly pleased to see the inclusion of the Developing and Empowering our Aspiring Leaders (DEAL) Act, sponsored by Representative Trey Hollingsworth (R-IN). This legislation would 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 fund. The DEAL Act would allow VC funds to continue to follow their portfolio companies along their growth path without fear of triggering a significant regulatory burden. Modernizing the SEC’s definition of a VC fund to more accurately reflect the industry has become one of the most significant regulatory priorities facing the startup ecosystem.
You can read NVCA’s endorsement of the JOBS and Investor Confidence Act of 2018 here.