Big Story: House advances capital formation bills
A key House panel advanced several bills this week aimed at improving access to capital for small businesses, including startups. On Tuesday and Wednesday, the House Financial Services Committee advanced a set of bills aimed at expanding access to investment and improving regulatory clarity for startups. These bills would play a critical role in helping startups grow and scale by increasing the pool of potential investors and unlocking opportunities for innovation across the country.
Access to capital is one of the first—and most persistent—barriers startup founders encounter, and startups have long called on policymakers to create more opportunities for people to invest in early-stage startups, including by expanding the definition of an “accredited investor,” which currently limits who can invest in early-stage companies based on wealth or income. Several of the bills advanced this week would expand the definition of accredited investor, including by allowing individuals to qualify through licenses, certifications, exams, or relevant job experience. Another measure advanced by the committee would require the Securities and Exchange Commission to review the definition every five years. The Committee also advanced the Helping Angels Lead Our Start-Ups Act to clarify that participating in pitch events does not count as a public offering, which would provide regulatory clarity around participating in demo days.
Taken together, these measures would give startups more ways to access funding. Earlier this year, more than 130 startup founders, investors, and organizations from over 35 states called on Congress to increase access to capital, including by updating the accredited investor definition, arguing that the current definition excludes qualified investors and narrows the capital networks available to early-stage founders. Congress should pass these bills quickly to expand who gets to participate in the startup ecosystem and ensure more founders have access to the early-stage investment they need to build innovative companies.
Policy Roundup:
Engine warns lawmakers about state AI patchwork. Ahead of a hearing on AI innovation this week, Engine sent a letter to the House Energy & Commerce subcommittee on commerce, manufacturing, and trade, warning that a state patchwork of AI rules will harm startups. During the hearing, lawmakers discussed how regulation could impact startups and Rep. Jay Obernolte (R-Calif.) noted that the burden of “1,000 different state laws”falls heaviest on “innovators in a garage trying to start the next OpenAI or Google.”
House passes wide-ranging tax package. The House narrowly passed legislation on Thursday morning advancing a sweeping package that includes key startup-relevant provisions on tax incentives, AI, and telecom. While some parts of the package face an uphill battle in the Senate, Congress should ensure the final measure supports the startup ecosystem.
Engine defends startups’ content moderation efforts. Engine submitted comments this week to the Federal Trade Commission's (FTC) inquiry into technology platform censorship, urging the agency not to undermine startups’ rights to moderate content. As the FTC explores how platforms handle user content, policymakers must recognize that startups need to engage in a wide range of content moderation activities to keep their corners of the Internet safe, healthy, and relevant for their users.
Senate considers nominee for USPTO director. The Senate Judiciary Committee held a nomination hearing on Tuesday for John Squires to lead the U.S. Patent and Trademark Office. While Squires acknowledged the threat of patent trolls and the importance of high-quality patents, he expressed plans to reform the Patent Trial and Appeal Board (PTAB) and patent subject matter. As Engine has emphasized, such reforms actually risk undermining patent quality w and could disproportionately harm startups by restricting access to affordable, effective avenues like the PTAB for challenging weak and overbroad patents that are easily weaponized against startups.
Trump signs deepfake bill into law. President Donald Trump signed the Tools to Address Known Exploitation by Immobilizing Technological Deepfakes on Websites and Networks (TAKE IT DOWN) Act on Monday, a measure that requires platforms to remove content that has been reported as non-consensual content, including AI-generated content. Critics of the bill have warned that it could undermine free expression and privacy and security measures.
Startup Roundup:
#StartupsEverywhere: Los Angeles, California. With a background in product marketing and research, Kene Anoliefo knew the struggles of increasing research insights to match the fast-paced development of products. We sat down with the HEARD co-founder to discuss her company, the role of AI in the startup ecosystem, and more.
