Senator Ruben Gallego (D-AZ) is introducing bipartisan legislation to encourage startup business growth during "demo days."
"Demo days" are events where startup companies pitch their products or services to investors, which is the premise of the ABC television series Shark Tank.
Sen. Gallego's Helping Angels Lead Our Startups (HALOS) Act clarifies Securities and Exchange Commission (SEC) "general solicitation" laws to exempt demo days, pitch competitions, and community economic development events, so long as the startups do not advertise investment terms or the event sponsors do not offer investment advice, negotiate terms, or receive compensation for connecting issuers and investors.
"Entrepreneurs often attend demo days to share their ideas and attract investors, but confusing and outdated rules make it hard to do that without worrying about violating securities laws," said Sen. Gallego in a statement. "By cutting unnecessary red tape and clarifying the rules around demo days, we can make it easier for Arizona entrepreneurs grow their businesses, create jobs, and build a more diverse mix of small businesses and founders across our state."
Senator Pete Ricketts (R-NE), the bill's cosponsor, said, "Startups drive American innovation. Entrepreneurs in the Silicon Prairie and across the country shouldn't be stifled by red tape when trying to share their ideas with investors." "The HALOS Act cuts through unnecessary bureaucracy so that promising companies can attract the capital they need to grow, create good-paying jobs, and help maintain America's technological edge," he added.
In July, Sen. Gallego teamed up with Senators Todd Young (R-IN) and Tammy Duckworth (D-IL) to introduce the Investing in Main Street Act, which permits banks to invest up to 15% of their capital into Small Business Investment Companies (SBICs), thereby increasing growth, providing jobs, and boosting economic productivity.
"Starting a small business gives those willing to work hard a shot at achieving the American dream. But without access to capital, it's nearly impossible to get a small business off the ground," the Arizona Senator said.
