By: Chris McCannell, Partner at Eris Group

Editor’s Note:  Eris Group is ACA’s federal advocacy firm, providing our association with advice and connections on Capitol Hill, the White House and federal government agencies.  Their expertise and extensive network has helped ACA make considerable headway in Washington, DC.  Below is a note on our accomplishments and work together in 2018.

2018 was another successful year of public policy engagement for the Angel Capital Association. Eris Group is pleased to represent your association in Washington, DC.  Last year we continued to build productive relationships with Members of Congress, regulators, public officials and high-level policy leaders in the early stage capital ecosystem that led to a useful new law for angel funds and supportive tax policies.

By: Marianne Hudson, ACA Executive Director

Recent progress to the American Innovation Act of 2018 (AKA “tax reform 2.0”) to include a proposal to protect Net Operating Losses (NOLs) of startups has the Angel Capital Association cheering.  ACA, along with the National Venture Capital Association, Biotechnology Innovation Organization and AdvaMed called for Congress to address an unintended consequence of rules blocking “loss trafficking.” The bill was introduced to reform rules that can unintentionally punish startups for attracting investments to support the growth of their companies.  Reform to the existing rules, written in the mid-1980s, will have significant impact on startup companies and their ability to gain full valuation for additional investments and exits.

By: Marianne Hudson, ACA Executive Director

Last week I had the pleasure of attending the board meeting of the Center for American Entrepreneurship.  This non-profit, non-partisan organization provides education and advocacy on the critical importance of entrepreneurs and startups to innovation, economic growth and job creation to America’s policymakers.  CAE has advocated for several issues that ACA cares about.

By: Mark Graffagnini, Cara Stone, LLP, ACA Public Policy Advisory Council Member

The Investment Company Act of 1940 (the “ICA”) defines an “investment company” as any issuer which “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.” This definition generally includes angel funds, venture capital funds and other types of private equity and hedge funds, unless an exemption applies.

By: Marianne Hudson, ACA Executive Director

ACA and angel investors celebrated victory this week at our nation’s capital as the bill to solve the “99 Investor Problem” passed the House of Representatives on Tuesday, May 22.  The resolution to the 99 investor problem is part of S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, which focuses on reducing the regulatory burden on community banks by rolling back Dodd-Frank regulations.  Included in the bill is a provision to raise the cap on the number of investors in angel funds and syndicates from 99 investors to 250 in funds of $10 million or less.  This piece of legislation passed with 258 votes, 33 Democrats voting in favor, so somewhat bipartisan.  The bill was signed by the President on Thursday, May 24, making it law (probably pending rule-making).

By: Marianne Hudson, ACA Executive Director

I thought you would be interested in a handy summary of the tax reform bill, the Tax Cut and Jobs Act, which was signed into law by the President just before the Christmas holiday.  It is by Bloomberg Government and was done before some small tweaks by the Senate, but should be pretty close to the final law.

There are three things to know about tax reform that affect angel investors and new companies, most of which ACA supported and promoted on Capitol Hill:

By: Marianne Hudson, ACA Executive Director

The Angel Capital Association joins the National Venture Capital Association, Center for American Entrepreneurship and many others in thanking Congress for dropping a proposed tax on equity compensation of startup employees that would have devastated the way many high growth companies pay their employees.  The proposal was in both House and Senate bills for tax reform.  The experience of watching many organizations form a coalition and explain to House and Senate leaders how the proposal would have damaged an incredibly important part of our economy also showed us how much power we can have in Washington, DC when we work together.

By: Marianne Hudson, ACA Executive Director

On November 2, Congressional Republicans introduced their new tax reform legislation.  It includes many tax cuts and simplifications that are getting considerable media attention.  I am heartened by a focus that is getting much less press – a focus on entrepreneurship and innovation, in recognition of the importance of the formation of new companies on our economic health.  The bill continues some tax policies ACA has fought for and so ACA has provided a message of support for the bill.  Below is a copy of our public statement supporting the bill, H.R. 1.

By: Marianne Hudson, ACA Executive Director

Tax reform is nearing the top of the to-do list in Washington, DC.  On September 12, 2017, I went to DC along with colleagues from the National Venture Capital Association and the Biotechnology Industry Association to meet with several Members of Congress to discuss tax policies for startups.  ACA has formed a coalition with NVCA and BIO to promote tax policy that all three organizations support.  Having three organizations work together provides more power and gives us an extra “listen,” if you will, in our Capitol Hill meetings and beyond.

By: Marianne Hudson, ACA Executive Director

All of us know about — or personally know — talented foreign-born entrepreneurs who have created successful businesses in the US.  Think Intel, eBay and Tesla. Immigrant entrepreneurs are behind more than half of America’s startup companies valued at $1 billion or more.

That’s why the Angel Capital Association is joining the National Venture Capital Association (NVCA) and many other leading entrepreneurial organizations to support the International Entrepreneur Rule.