Director, Legal & Compliance	

Hey Stonks fans! A bit of a different tone today, coming at you from the Stonks Legal Department with some proposed legislative updates that could really spice up the venture capital space.

There are several bills pending in the House of Representatives that aim to make VC more accessible in a variety of ways, from raising the amounts a startup can crowdfund to making it easier for VC funds to invest in secondaries. With a divided Congress and a Democratic president, it’s a toss-up which of these (if any) end up making it into law and in what form: for now, we’ll break down the benefits of a few of the proposals for your reading pleasure.

This law would further expand on the JOBS Act of 2012, particularly in the “VC for the masses” department under Reg CF. If passed, it would allow companies to raise up to $10M in Reg CF fundraising/year (up from the current $5M), potentially making it a lot more attractive to startups. Currently, a Reg CF campaign can take a lot more time and money than the standard Reg D raises (which can raise an unlimited amount of money from an unlimited* number of accredited investors with minimal paperwork), so many startups are turned off of the prospect of getting hundreds or thousands of small checks when they could just get a few big ones for less work. Raising the cap to $10M could allow for more companies to take advantage of opportunities like the 

 to grow their war chest AND their user base at the same time 👊

Additionally, this law would allow for “investment companies” (read: micro-VC funds) to use Reg CF to raise funds, which could enable Average Joes and Janes to invest in funds (rather than individual companies), granting them some much-needed diversification in the startup ecosystem and letting GPs with lots of followers raise from the masses. TBD on how this one would work out, since Reg CF currently requires things like audited financials and other documentation of an existing company, but opening this asset class on a broader scale is a net positive for everyone.

Eric Swanson

A slew of legislative proposals could really boost the startup space

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Director, Legal & Compliance

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