Public Policy 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 One of the most important and effective things ACA does for our members is to represent you in Washington, DC. We do this to ensure you have the best possible environment to invest in and support interesting entrepreneurs. This gives you the best possible chance to enjoy your angel experience and to help wonderful companies exit, leading to good returns for you. Sometimes our work is aimed at creating new tax benefits or legislation allowing more investors in a fund, but other times our work is truly “do no harm.” In fact, over the last eight years, our main public policy work has focused on ensuring the definition of accredited investor is not changed in a way that cuts the number of angels in half. The Securities and Exchange Commission (SEC) is lobbied all the time to raise the thresholds for net worth and income by inflation beginning in the 1980s, more than doubling the $1 million and $200,000 requirements. Our past research with ACA members showed more than 30 percent of us would no longer be angel investors if that happened. That’s what I call “existential!” 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. By: Marianne Hudson, ACA Executive Director
I am pleased to welcome Linda Smith as she begins to serve as Chair of ACA’s 18-member Board of Directors on July 1. Linda has served as ACA Vice Chair for two years, during which she has been instrumental in updating ACA’s strategy growth, shaping the policies that impact startup communities and angel investors, and meeting with Congressional representatives regarding important policy issues for angels.  By David Verrill, Chair of ACA’s Public Policy Committee Ten days ago, I took a trip to Washington, DC with ACA executive director Marianne Hudson and our government affairs team of Chris McCannell and Greg Mesack from Eris Group. It was an interesting three days, with a combination of planning our policy work for the year, meeting with other associations with overlapping interests, and ten meetings on Capitol Hill. This was the week after the inauguration of President Trump, and you could see a lot of change in our nation’s capital. Here is what I learned: Comprehensive Tax Reform Comprehensive tax reform is coming (after Congress deals with the repeal and replacement of Obamacare), with the goal of having it done by August 1. Most believe that the House will follow blueprints by Paul Ryan and former Ways & Means chair Dave Camp as the basis to build on, with the following features: |
