Entrepreneurial current events: four bills for entrepreneurship
Four bills favoring entrepreneurship are knocking on the door of approval:
- The first is a bill passed by the House on November 3 called the “Entrepreneur Access to Capital Act,” which allows crowd funding à la Kickstarter. Early stage companies can solicit and raise up to $2 million in capital via the Internet for their early stage companies. Individual investors may invest $10,000 or 10% of their annual income, whichever is lower.
- Another bill passed by the House reforms the SEC regulation that limits companies from raising more than $5 million in equity offerings without registering with the SEC. The Small Company Capital Formation Act raises the threshold to $50 million. So more companies can raise more money without embarking on the grueling process of registering with the SEC!
- The third bill relates to the Small Business Innovative Research (SBIR) program that exists as a set aside of 2.4% of the annual budgets from federal agencies to fund small businesses (which are defined as having fewer than 300 employees). Whether companies which are venture capital funded can qualify for such grants has kept the SBIR legislation from being reauthorized since 2008 and the program has survived through short term extensions. While the House and Senate keep arguing about this issue, the SBIR program keeps going and keeps funding early stage companies. What is there not to like about non-dilutive funding for new ventures that can change the face of our nation and perhaps the world?
- The fourth bill is local to Pennsylvania, a Johnny-come-lately state to providing tax credits for angel investors. Scheduled to be voted upon by the state House later this month is the proposed Angle Investment Tax Credit legislation. As reported by the Pittsburgh Post Gazette earlier this month, the bill would provide “ a tax credit worth 25 percent of an investment made into a Pennsylvania company that has existed less than five years and raised less than $5 million since its inception.” If passed, Pennsylvania will be state behind at least 20 other states in passing such a bill. Better late than never is all I can say!