The Helping Angels Lead Our Startups Act or HALOS Act passed the House today with solid bipartisan support. The final vote stood at 344-73. The HALOS Act, sponsored by House Small Business Committee Chairman Steve Chabot, addressed a nagging issue regarding when a business may make a pitch to potential investors without breaking securities laws.
As it stands now, startups pitching to investors is pretty much illegal unless you can prove everyone is an accredited investor. Pitch events have been occurring for years at University campuses and Angel investor events. The Bill will remove the transgression of securities law for possible issuers.
The HALO Act (HR 79) defines an “angel investor group” and clarifies a regulation issued by the Securities and Exchange Commission about when a business can make a presentation to interested parties without running afoul of the securities laws. Of course, most successful small companies started quite small pitching to potential investors. Think Google and Facebook.
House Financial Services Committee Chairman Jeb Hensarling released a statement on the vote;
“Our economy works better for all Americans when small businesses can focus on creating jobs rather than navigating bureaucratic red tape. The early-stage capital for a startup provided by angel investors is vitally important. The HALOS Act fixes a regulatory overreach so it will be easier for small businesses to attract early-stage investment.”
Hopefully one of the next items on the list is the definition of an Accredited Investor.
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