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.