During his keynote address at last week’s ACA Summit,
Congressman David Schweikert (R-AZ), Chairman of the Small Business
Subcommittee on Investigations, Oversight, and Regulations, spoke passionately
of the importance of creating an ecosystem conducive to entrepreneurial
investment.
“Capital formation is the future of job creation,
and therefore our economy,” says Schweikert.
“I believe that by the end of the decade the way we finance will look
very different than it did when we grew up, and it is our responsibility to
ensure that legislation supports present day needs.”
In the 112th Congress, Schweikert was the leading
author of investment legislation which became part of the ‘JOBS’ Act, signed
into law by President Obama. In
Congress, Schweikert is a prominent voice in driving the Securities and Exchange
Commission (SEC) to promulgate rules on the ‘JOBS’ Act. The ‘JOBS’ Act, passed more than a year ago,
includes a number of initiatives aimed at increasing access to capital for
startups and high growth firms, and requires the SEC to publish detailed rules
before activities such as equity crowdfunding may begin.
“We were honored to have Congressman Schweikert join
us at the Summit,” says ACA Chairman David Verrill. “He is a leading voice for angel investors
and a tenacious advocate for driving the SEC rulings related to the ‘JOBS’ Act. We also appreciate his advocacy for an
expanded Regulation A and IPO onramp, the two pieces of the JOBS Act he spearheaded
and which are leading to exit opportunities for investors and to growth for
entrepreneurial companies.”
Just a week prior to the Summit, Jean Peters, ACA Board
Member and Managing Director of Golden Seeds, testified before the subcommittee
chaired by Mr. Schweikert to advocate on behalf of angel investors and entrepreneurs.
The “JOBS Act Implementation Update” hearing was hosted by the House Small
Business Subcommittee on Investigations, Oversight, and Regulations and witnesses
included representatives of the SEC, entrepreneurs, investors, and academics.
“Angels fund the majority of early stage deals," Peters
told the subcommittee.
“Let me briefly describe angel investing: Angels are
accredited investors whose capital comes from our personal pocketbooks. Most
are former entrepreneurs, or were successful in business – and want to help
others up that ladder. We invest at the most primal point of capital formation
-- small startups with high growth potential.
“These companies come out of university research,
local business incubators and economic development efforts. They reflect the
entrepreneurism that is addressing the business, education and health care
challenges we face as a nation today.
“Angels are the only source of capital for most
startups, and supply up to 90% of outside equity raised by seed-stage companies
after they exhaust any resources from friend and family, according to Kauffman
Foundation estimates.
“In fact, angel investors fund 20 times the number
of seed-stage companies than venture capital. In 2011, angels invested $23
billion dollars in 66,000 early-stage companies, while VCs put a few billion
into 1,800 startups, plus $20 billion in 2,000 later stage companies.
“Angel-funded companies are in every state and
industry sector. They are crucial for job growth. According to Census Bureau
data, startups comprise less than 1% of companies, but generate 10% of new jobs
in any given year.
“Without angel funding, these businesses would
simply never get off the ground.”
Of Peters’ involvement in the hearings, Congressman
Schweikert comments: “We greatly appreciate Jean coming to DC to help tell this
important story and further drive the SEC rules forward. ACA
plays an important role in providing a voice for public policy makers on the
critical needs of angel investors and our mandate to do no harm in furthering our
vision for economic growth of start-up enterprises.”
The 2013 ACA Summit, held last week in San Francisco, was the largest ever worldwide professional
gathering of angel investors, with over 650 attendees.
