Startup America Gets a Do-Over

February 2, 2012, 10:04 am

 

On the one-year anniversary of "Startup America," the White House's sweeping public-private effort to bolster high-growth companies, President Barack Obama has issued a new call to give entrepreneurs a leg up -- but some critics suggest that the effort is all but useless.

The President today sent Congress a new batch of small-business enhancing measures -- collectively called the Startup America Legislative Agenda -- which he hopes will expand tax relief and shore up capital for startups and small businesses that are creating jobs. The roughly $48 billion agenda would also seek to attract and retain foreign-born entrepreneurs and skilled immigrants to the U.S. 

"I urge Congress to send me a common-sense bipartisan bill that does even more to expand access to capital and cut taxes for America's entrepreneurs and small businesses," the President said in a statement.

Among other things, Obama would give small businesses that hire or boost wages in 2012 a 10 percent tax credit on new wages. He also called on Congress to permanently double the amount of start-up expenses entrepreneurs can deduct from their taxes to $10,000 from $5,000 and extend to 100 percent the first-year depreciation for the purchase of qualified property placed in service before Jan. 1, 2013.

The President would also expand the Small Business Investment Company program to allow for up to $4 billion in annual support. And he called for what's being referred to as an "IPO on-ramp" program, which would change how current securities laws and regulations are phased in for small companies and startups in their first years after going public. Obama also proposed creating a national framework for entrepreneurs and small businesses to raise capital through "crowdfunding," a type of investment regime that asks for typically small amounts of capital from strangers.

Although a number of the President's proposals have already won bipartisan support in the past, some critics suggest that passage is unlikely in an election year. "Given the opposition to the payroll-tax cut, obviously [the President] doesn't have the cooperation of Congress," says Dean Baker, co-director of the nonpartisan Center for Economic and Policy Research in Washington, D.C. He added that this latest announcement is nothing more than a wish list. "Republicans don't want to give him any key victories before the election."

What's more, a number of last year's more prominent measures still haven't won approval -- or they're being held up for one reason or another. The U.S. Small Business Administration's $1 billion early-stage investment fund, which aims to invest in businesses that need between $1 million and $4 million in financing won't begin until later this year. And while the SBA has dedicated $1 billion toward new state funds aimed at helping improve capital access, the agency has so far launched only one Impact Investment Fund in Michigan, providing just $130 million in capital to high-growth businesses.

And at least one of the measures contained in today's legislative agenda was also included in last year's Startup America package and still hasn't received a green light. The permanent elimination of the capital-gains tax on certain small-business stock held for more than five years needs Congressional approval to proceed. A similar capital-gains tax provision was passed in 2010 but expired last year.

"It is the case that there are individual provisions that have moved in one House [of Congress] or another," says Gene Sperling, director of the National Economic Council. "What the President was doing by putting forward this legislation is to put together a core of small business and capital access programs… into one package to gain bipartisan support."

To be sure, many of last year's Startup America provisions have not only gone forward but are also informing these latest proposals. For instance, the Treasury Department was charged with hosting a conference last year that looked into small businesses' access to capital. And the ideas stemming from that conference helped construct the President's current proposal on easing small and young companies' entrance into the public markets, according to Mary Miller, the Treasury's assistant secretary for financial markets.

Further, the private side of last year's Startup America package seems to be making progress even though the chief private initiative -- dubbed the Startup America Partnership -- launched only in September. In 2011, a number of initiatives rolled out to aid small businesses, including mentorship programs and entrepreneurship courses provided by nonprofits and corporations.

And despite the slow start, the Startup America Partnership -- which is aimed at spotlighting entrepreneurs, helping them connect with resources and supporting regional startup ecosystems -- has attracted nearly 3,000 high-growth firms and more than 50 business partners like Hewlett-Packard and Intuit. To date, those companies have collectively made more than $1.2 billion in in-kind commitments to the program, which is chaired by Steve Case, the co-founder of AOL. And just today, nine new regional chapters have signed on -- bringing the tally to 17.

Entrepreneur Charlotte Creech called her experience with the Startup America Partnership instrumental. As the CEO and co-founder of Combat2Career, a West Simsbury, Conn.-based online service that connects veterans with higher-education opportunities, she reached out to one of the regional divisions of Startup America. The director of the Connecticut program arranged not only for Creech and her business partner to attend vital networking events, but also make connections to high-level government officials. "These connections have been instrumental in helping us spread the word, gain support and establish credibility," says Creech, who has so far raised more than $225,000 in funding to develop the web portal.

Only time will tell how effective the program overall will be for entrepreneurs, Steve Case told Entrepreneur.com from the New York Stock Exchange where he and startup founders participating in the program rang the opening bell yesterday. "I think for the first year, we made great progress."

Source: Entrepreneur.com  By: Diana Ransom

Four Bills to Help Small Businesses Gain Access to Capital Pass the House

November 29, 2011, 10:21 am

From the office of Rep. Robert Dold (Ill., 10th District)…

WASHINGTON, DC – U.S. Congressman Robert Dold (IL-10) is a co-sponsor of four bills that passed the U.S. House of Representatives this week. Collectively, these bills will give small businesses easier access to capital for creating and maintaining jobs. As a co-sponsor, Dold advocated for passage on the House floor.

“The government cannot create net new jobs. Small businesses do that,” said Rep. Dold. “And so I’m proud to support these four different bills that improve the conditions for small businesses to access the capital needed to grow, expand, and create new jobs. By sensibly and responsibly improving the regulatory conditions for job creators, we are one step closer to putting our nation back to work. This bipartisan legislation is exactly the kind of thing we need to be doing in Washington -- looking for common ground that helps business grow and creates new opportunities for people to find and create new jobs.”

Background Information from the Financial Services Committee on the bills that passed through Subcommittee:

H.R. 2167, the Private Company Flexibility and Growth Act, introduced by Rep. David Schweikert

H.R. 2167 removes an impediment to capital formation for small companies by raising the shareholder threshold for mandatory registration with the SEC from 500 to 2,000 shareholders. The shareholder threshold was originally adopted in 1964 and has not been modernized since then. At a recent hearing, the Committee received testimony from witnesses regarding the impact the bill will have on the availability of credit for small companies, job creation, and economic growth.

H.R. 2940, the Access to Capital for Job Creators Act, introduced by Rep. Kevin McCarthy

H.R. 2940 removes the regulatory ban that prevents small, privately held companies from using advertisements to solicit sophisticated investors for private offerings. Securities laws not only prohibit general solicitation and advertising, but also require investors to have an existing relationship with the company to meet SEC exemption requirements. This ban has limited the ability of small businesses to raise capital.

H.R. 2930, the Entrepreneur Access to Capital Act, introduced by Rep. Patrick McHenry

H.R. 2930 permits “crowd-funding” to finance new businesses by allowing companies to accept and pool donations up to $5 million without registering with the SEC. Crowd-funding is an innovative and lower-risk financing mechanism that enables several individuals to pool investment money with a particular company. Current SEC regulations prohibiting general solicitation have prevented crowd-funding from developing and flourishing in the United States.

H.R. 1965, introduced by Rep. Jim Himes

H.R. 1965 modifies regulations concerning registration and de-registration of small bank holding companies under securities laws. Current law prohibits community banks from de-registering if they have more than 300 shareholders. As a result, to de-register, many community banks have had to use scarce capital to buy back shares instead of providing more capital to their community’s families and businesses.

Bill Passes with Overwhelming Bi-Partisan Support: 421 to 1

November 21, 2011, 4:34 pm

SANTA MONICA, Calif.--(BUSINESS WIRE)--November 14, 2011--
In a move symbolic of unprecedented bi-partisan support for stimulating new job creation, the House of Representatives passed by a margin of 421 to 1 the Small Company Financing Act, and by a similar margin the Entrepreneurs Access to Capital "Crowdfunding" Bill.

"This is a great day for entrepreneurs and heralds the most important move yet towards reviving our economy. Everyone complains about the deadlock in Washington and the lack of bi-partisan real action to create jobs. Well some credit for important action has to be given here. These bills supported by the President, the Democrats and the Republicans will immediately begin creating jobs," Stated Howard J. Leonhardt Founder & Chairman of The Entrepreneurship Party and The California Stock Exchange.

The Entrepreneurship Party www.entrepreneurshipparty.com, is a public policy institute supporting entrepreneurs (E Party) and The California Stock Exchange (CalX) www.calstockexchange.com, has long supported the passage of these bills. The new laws will make it easier for small companies to raise capital at less cost.
Howard Leonhardt will present The California Stock Exchange plan at the Startup Financing session at the Future of Entrepreneurship Education Summit www.feesummit.com in Washington D.C. Nov. 18th, 2011 at 4pm at the U.S. Chamber of Commerce.

Contact: Ms. Sofia Yepes, Executive Assistant, The California Stock Exchange, Santa Monica, California via email howard@calstockexchange.com, see web site www.leonhardtventures.com for more information.
About CalX The California Stock Exchange: Formed in 2008 CalX is divided into two parts; the first is a collection of existing best in class service providers that help small firms raise capital. The second is the preparation for an entirely new revolutionary stock exchange under the motto, "This is not your father's stock exchange." Soon to come the CalX ap button on the bottom of press releases, articles and videos providing easy access to crowdfunding. CalX takes special steps to promote local investing and investment in social good enterprises. The California Stock Exchange has the goal to create 23 million new jobs within the next five years, not just any jobs but jobs that people love, by providing the funding mechanisms for people to pursue their dreams.
 
CONTACT: The California Stock Exchange
Ms. Sofia Yepes, Executive
Assistant
954-401-0096
howard@calstockexchange.com
 
SOURCE: The California Stock Exchange
Copyright Business Wire 2011

CalX and The Entrepreneurship Party strongly endorse this "Entrepreneurs Access to Capital Act". Write your representative letting them know that you want them to vote yes on bill HR 2930.

November 3, 2011, 3:53 pm

 http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/HR2930%201027b.pdf
“Entrepreneur Access to Capital Act,” <http://www.rules.house.gov/Media/file/PDF_112_1/legislativetext/HR2930%201027b.pdf>  (PDF link) the legislation in question — which was amended by the House committee on financial services this week and now goes before the full House for discussion — would make it easier for small businesses or individuals who want to start a company to raise funds from investors <http://www.reuters.com/article/2011/11/01/us-crowdfund-regs-idUSTRE7A06BJ20111101> . In a nutshell, the new law would exempt those investors from most of the regulatory tests they currently have to pass before they can invest in the shares of a private company, and allow them to invest through crowdfunding platforms such as The California Stock Exchange and RocketHub.