The Big Story: House passes capital formation package
The House voted Thursday, 302 to 123 in favor of advancing a sweeping capital formation package designed to increase opportunities for investors of all backgrounds and for companies to raise money. The Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act combines more than 20 bipartisan bills to expand capital access for small businesses, update investor eligibility rules, increase opportunities for emerging funds, and reduce barriers that can keep companies from going public.
For startups, several provisions in the package would meaningfully expand founder access to early capital, who can invest, and how emerging funds are able to participate. The package includes reforms to the accredited investor definition. The package also incorporates targeted updates that allow education, professional credentials, and experience—not just wealth—to determine whether an individual can invest in private offerings. Moving beyond narrow wealth-based thresholds—that only 19 percent of households meet—would allow more people to invest at the earliest stages, helping founders from all regions and backgrounds connect with the capital they need to get off the ground. Additional provisions further strengthen a founder’s capital access journey by modernizing crowdfunding rules and clarifying general solicitation rules at startup demo days. It also proposes updating 3(c)(1) fund caps, increasing the allowable number of limited partners from 250 to 500. This expansion opens the door for investors outside traditional networks and helps founders in overlooked regions access capital earlier. The package also reduces friction for companies looking to go public by streamlining disclosure requirements to make it faster, simpler, and more practical for companies to go and stay public.
Sixteen of the twenty-two bills previously passed the House under a process typically reserved for broadly agreed-upon, noncontroversial measures, reflecting strong bipartisan agreement around expanding capital pathways. These bills would help startups in communities across the country by ensuring capital can flow beyond traditional hubs like Wall Street and Silicon Valley into regions that have historically been overlooked. The House vote this week presents a renewed opportunity to move forward on reforms that affect many founders and a fresh chance for the Senate to advance widely supported, long-requested changes.
Policy Roundup:
Trump signs executive order on state AI laws. After Congress opted not to include a moratorium on state AI regulation in the National Defense Authorization Act of 2026, President Donald Trump signed an executive order this week aimed at ensuring that AI policy is set at the national level through funding incentives and a task force to sue states that enact their own AI rules. Startups have warned that a patchwork of state rules raises compliance costs and creates uncertainty, but any federal framework should prioritize clear, consistent obligations that support innovation across the country.
House panel advances bills to limit kids’ tech access to full committee. The House Energy and Commerce subcommittee on commerce, manufacturing, and trade marked up and advanced 18 proposals that would study how young people use Internet services, change how Internet companies interact with young users, and create obligations around how much the companies have to do to identify whether a user is young. As we previously told the committee, , several proposals under consideration could unintentionally burden startups through, e.g., inconsistent standards and costly audit requirements. Partisan disagreement over the scope of the bills was apparent as the committee proceeds to a full markup.
New York Governor suggests revised approach to AI model regulation. Through New York’s unique chapter amendment process, Governor Kathy Hochul (D) has proposed extensive changes to the Responsible AI Safety and Education (RAISE) Act—an AI bill originally designed in ways that could restrict availability of models relied on by startups—replacing most of the text with language that closely mirrors California’s recently enacted SB 53. Aligning the pieces of similar legislation will help to avoid creating an increasingly fractured landscape for AI policy.
New “Gold Card” visa program threatens the innovation ecosystem. President Donald Trump launched a new “gold card” visa program this week, offering expedited residency for individuals or employers willing to pay at least $1 million. Unlike existing visas relied on by startup founders and early employees, this pathway prioritizes wealth over innovation. Policymakers should prioritize an immigration system that expands—rather than narrows—accessible talent pipelines for entrepreneurs.
Australia bans social media accounts for under 16s. A new law went into effect Wednesday restricting social media accounts for anyone under 16 in Australia. The decision puts Australia at the forefront of decades-long attempts to regulate youth access to digital services. As policymakers in the U.S. debate similar measures, Engine has continuously emphasized that any new requirements must account for the significant costs, privacy risks, and cybersecurity challenges tied to age-verification mandates that often fall heaviest on startups.
On the Horizon:
TUE 12/16: The House Judiciary subcommittee on the administrative state, regulatory reform, and antitrust will convene a hearing examining how foreign governments' antitrust actions affect U.S. businesses at 10:00 AM ET.
TUE 12/16: The Senate Banking, Housing, and Urban Affairs subcommittee on financial institutions and consumer protection will convene a hearing on ensuring fair access to banking, with a focus on policy levers and legislative solutions, at 3:00 PM ET.
WED 12/17: The Senate Commerce, Science, and Transportation Committee will convene an oversight hearing of the Federal Communications Commission at 10:00 AM ET.
WED 12/17: The House Homeland Security subcommittee on cybersecurity and infrastructure protection will convene a hearing on the quantum, AI, and cloud landscape—examining opportunities, vulnerabilities, and cybersecurity implications—at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Austin, Texas. During peak travel season, quick and reliable turnover is essential for rentals. Diana Muturia and her co-founder built Clyn, a platform that automates cleaning operations for short-term and vacation rentals. We sat down with Diana to discuss her journey building the platform, the challenges of fundraising, the barriers to accessing public data, and broadband infrastructure.
