ACA Meets in DC to talk QSBS, Accredited Investor Definition

Angel Capital Association (ACA) CEO Pat Gouhin and North Coast Ventures Founder and ACA member Clay Rankin were in Washington D.C. from March 27 to March 29, 2023. During that time, they met with relevant legislators and federal agencies to discuss ACA’s concerns regarding Qualified Small Business Stock (QSBS) regulations and the possibility of expanding the Accredited Investor (AI) definition.

On March 27th, the ACA leadership first met with Daniel Krupnick, Senior Counselor to Administrator Guzman, and David Brown, Director of Policy at the Small Business Administration (SBA). During the conversation, Krupnick and Brown asked ACA to write a letter supporting the SBA’s efforts to modernize small business lending criteria, provide nonprofit lenders SBA permanency, and enroll new, responsible lenders with proven capacity to reach small borrowers.

Afterward, the team met with Payson Peabody, Senior Tax Counsel to Ways and Means Chairman Jason Smith (R-MO). The team relayed its positions on Sec. 1202 of the US Tax Code and the AI definition. Payson was receptive to ACA’s message. He also shared potential policy prescriptions that are currently under consideration, including creating new retirement accounts for the families of small business owners to invest in future start-ups as well as accounts that would allow current employees to invest in a fund that could be used exclusively for investment in early stage startups. 

On March 28th, the ACA team first met with Heather Slavkin Corzo, Policy Director at the US Securities and Exchange Commission (SEC), and Corey Klemmer, Policy Counsel at the Office of the Chair of the SEC. The team then met with SEC Commissioner Hester M. Pierce. During these meetings, the team relayed to the SEC the negative consequences of raising the threshold of the AI definition. Finally at the SEC the team met with Diem-Mi Lu, Counsel to the newly named Democratic Commissioner, Jaime Lizzarraga.

Later, the team met with Representative David Kustoff (R-TN). Kustoff has a bill to modify Sec. 1202’s QSBS gain exclusion. This bill would spur entrepreneurship and improve access to capital. Kustoff has been granted the green light to introduce this bill. Kustoff’s office would now like to list the organizations that have endorsed this legislation in its outreach to other congressional offices.

On March 29th, the ACA team met with Representative Wiley Nickel (D-NC). Rep. Nickel serves on the influential Financial Services Subcommittee on Capital Markets. During the meeting, Rep. Nickel said he would speak to Subcommittee Chairwoman Ann Wagner (R-MO) about helping ACA and expanding the AI definition.