New Bill Could Double the Number of Investors for Startups

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The U.S. House of Representatives has sanctioned legislation that would offer fast growing startups twice as much help for investment capital—a measure that could benefit black entrepreneurs.

The approval endorses a bill backed by Rep. Nydia M. Velázquez (D-New York), and would allow venture funds, often used as seed financing for small companies, to attract more investors.

The Investment Company Act of 1940 now caps the number of venture fund investors to 99 people, before the fund must register with the Securities and Exchange Commission. However, Velázquez’s bill will enable up to 250 accredited investors to filter money into a venture fund without registering, boosting the amount of equity investment small businesses could use.The bill, passed earlier this month, is co-sponsored by Rep. Patrick McHenry (R-North Carolina).

These investors often pool their money into local or national groups, according to Velázquez’s office. In recent years, many have begun using online crowdfunding platforms to filter more capital to small businesses and startups. In particular, these funds can help women and minority-owned firms that are pursuing capital to grow.

“This bill will mean that businesses that have traditionally struggled to secure capital will have more options available to them,” Velázquez claims. “By …read more      

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