Restoring American Financial Stability Act

The Restoring American Financial Stability Act passed the US Senate on May 20 and now heads to conference committee to reconcile the differences between the House and the Senate versions. The investor and startup community have long been concerned about the contents of Senator Dodd's financial reform bill, as it would erect several barriers to funding by changing the requirements for investor and business registration.

In the final Senate version, some of the parts most troubling to investors and startups were removed from the bill, including the provision that would require 120-day waiting period for state regulators to review any investment deal. The new income and net worth requirements for angel investors are still in place, but these will not increase with inflation. The SEC will review accredited investors every four years. An amendment to the bill was accepted, expressly aimed to protect angel investment. Liddy Karter, chairman of the AngelCapital Association (ACA) said in a press release, the amendment "ensures that entrepreneurs will more easily be able to raise angel capital and more accredited investors can continue making the angel investments they love to make."

Startup Visa Act

Senator Kerry and Lugar's Startup Visa Act is also in committee. Introduced in February, the Startup Visa Act will help foreign-born entrepreneurs secure visas. The proposed legislation will change the current requirements that now says investors from other countries must have $1 million in capital in order to get a visa to start a business in the US. The Startup Visa Act, supported by a number of investors, includingEric Ries, Dave McClure, Shervin Pishevar, Brad Feld, Paul Kedrosky, Manu Kumar, & Fred Wilson, proposed that non-US born entrepreneurs could get a visa as long as they had funding from a US investor.

Although the bill is in committee, Dave McClure did have an impromptu meeting with Secretary of State Hilary Clinton, urging her support for the legislation. Her staff, reports McClure, will follow up.

As research shows, young high-growth businesses generate a substantial number of new jobs, an argument that startups and investors will be sure to make as legislators debate the outcome of these two important bills.