Eris Group Helps ACA Get More Angels in Funds and Great Tax Policy in 2018

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.

Key successes include:

  • Ensured tax reform included 100% exemption of qualified capital gains and R&D tax credits for new businesses, while also delaying taxing of employee stock options.  We worked with House Ways and Means Chairman Kevin Brady (R-TX) and Senate Finance Chairman Orrin Hatch (R-UT) in support of H.R. 1, President Trump’s signature legislative initiative to lower taxes. The bill passed in mid-December 2017. In 2018 we continued to work with House Ways and Means outreach staff to amplify our support for H.R. 1 and build goodwill for additional improvements in the future.
  • Passed legislation to increase the number on investors in angel funds from 99 to 249 (for funds under $10 million). This legislation, sponsored by Reps. Patrick T. McHenry (R-NC) and Nydia M. Velazquez (D-NY) was included in Dodd-Frank reform legislation, S. 2155, which as signed into law by President Trump in May. We understand that some ACA member funds are already raising funds with 249 investors.
  • The House of Representatives passed the HALOS Act – which would exempt “demo days” from general solicitation rules – twice.  The HALOS Act was a lead example highlighted by House Financial Services Chairman Jeb Hensarling (R-TX) of common sense, bi-partisan capital markets reform legislation. While the House passed HALOS Act a number of times as both free standing legislation and most recently as part of JOBS Act 3.0, unfortunately the Senate has not been able to act, so reintroduction of this legislation in 2019 is a top ACA legislative priority.
  • Built a strong coalition with the National Venture Capital Association, BIO and AdvaMed leading to a new understanding in Congress that new businesses need different policies than corporations and small businesses.  We have continued to weigh in with the Treasury Department on implementation of H.R. 1, as well as advocated for the need for specific tax policy which helps investors in early stage companies. Our efforts were rewarded when the House passed legislation to allow for early-stage companies to not be hurt by “Net Operating Loss” regulations. Unfortunately, the Senate has not moved companion legislation, so that will be another focus in 2019.
  • Developed relationships with all U.S. Securities and Exchange Commissioners, improving their understanding of the importance of angel investors and startups. ACA met with the SEC Commissioners and their staff to talk about early stage investing with a purpose of ensuring the accredited investor definition stays the same or expands the angel investor pool.
  • Deepened relationships with the Commerce Department that helped ACA members receive grants.  ACA built its relationship with the National Advisory Commission on Innovation and Entrepreneurship (NACIE) and the Department of Commerce’s office of Economic Development. This partnership informed ACA member groups about the Regional Innovation Strategies grant program and some members were successful in receiving grants from the program.
  • Ensured ACA was part of discussions at the Treasury Department and National Economic Council (White House) with Trump policy staff on issues affecting early stage capital and angel investors.  White House and Administration staff have reached out to ACA for policy ideas to enhance the angel and startup ecosystem.
  • Educated the incoming House Majority on ACA issues and kept a harmful policy out of a bill that passed the House. After negotiating to ensure that a House bill did not include a requirement that startups file a Form D before they start raising capital via Regulation D, we used ACA’s most recent trip to Washington to educate incoming House Financial Service Chairwoman Maxine Water’s securities staff on the importance of angel investing and startups. The meeting also presented an opportunity to help position ACA as a potential Democratic witness in the 116th Congress.

ACA’s public policy engagement continues to rank as one of the most appreciated reasons why members join ACA.  We look forward to working with ACA to continue building the profile of the angel investing community and more public policy wins in 2019. We’ll continue to attend your larger events to keep you informed and to work weekly with ACA staff on this important work. 


Seed the Future's Mid-Campaign Update by Tony Shipley (Queen City Angels)  on  September 20
Failures and Fraud in Early-Stage Angel Investing by John Harbison  on  September 05