Hultgren: Angel Investors are Key to Successful Business Startups
Washington, DC — U.S. Representative Randy Hultgren (IL-14), member of the House Financial Services Committee, today supported House passage (325 to 89) of H.R. 4498, the Helping Angels Lead Our Startups (HALOS) Act, a bill he cosponsored. The bill frees up angel investors to consider supporting a startup business venture in its early stages without having to be subject to burdensome regulations that discourage potential investment.
Angel investors provide early-stage capital for a startup, so access to the broadest pool of potential investors is vitally important for smaller companies.
Following are excerpts from Rep. Hultgren’s prepared remarks:
“Chicago is recognized nationally as a hub for angel investors…These innovators oftentimes have a simple idea that can be life-changing, but financing these ideas so they can become a reality is harder than you might think.”
“Angel investors play a key role in the earliest stages of these startups; they provide the initial round of funding to help get these life-changing ideas off the ground. Start-ups are the job creators that drive our economy, make life-changing medical breakthroughs, and harness technology to accomplish the impossible.”
“…University of Illinois’s Research Park told me that this bill would address some of the unintended consequences of the JOBS Act and crowdfunding, which could make things like the Cozad New Venture Competition, Urbana-Champaign Angel Network (UCAN) angel presentations, our Share the Vision Technology Showcase, pitch practice at EnterpriseWorks, and other public forums for startups in Illinois problematic. They want to encourage showcasing our startups, without fear of these programs constituting a formal fundraising solicitation to report to the SEC.”
H.R. 4498 directs the Securities and Exchange Commission (SEC) to amend Regulation D Rule 506(c), so that it explicitly exempts events sponsored by angel investors, e.g., “demo days”, from being considered a general solicitation.
The bill further clarifies that the general solicitation limitations do not apply:
- To a presentation, communication, or event conducted on behalf of an issuer at an event sponsored by certain organizations;
- Where any advertising for the event does not reference any specific offering of securities by the issuer; or
- Where no specific information regarding an offering of securities by the issuer is communicated or distributed by or on behalf of the issuer.