Ricketts, Gallego Introduce HALOS Act to Strengthen Startups

WASHINGTON, D.C. - Today, U.S. Senators Pete Ricketts (R-NE) and Ruben Gallego (D-AZ) introduced the Helping Angels Lead Our Startups (HALOS) Act. The HALOS Act will make it easier for entrepreneurs to connect with investors and grow their businesses. These events encourage innovation. By supporting these events, investors will be better equipped to discover promising startups and entrepreneurs will be able to connect with a broader ecosystem.

"Startups drive American innovation," said Ricketts. "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."

"Entrepreneurs often attend demo days to share their ideas and attract investors, but confusing and outdated rules make it hard to do that without worrying about violating securities laws," said Gallego. "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."

"NVCA strongly supports the bipartisan HALOS Act, which removes unnecessary regulatory barriers that can complicate participation in Demo Days and hinder early engagement between entrepreneurs and investors," said Bobby Franklin, National Venture Capital Association President & CEO. "By clarifying that startups can discuss their products and business plans at these important events without triggering general solicitation concerns, the HALOS Act will help expedite capital access opportunities and strengthen the broader startup ecosystem in every corner of our country. We urge lawmakers on both sides of the aisle to advance this measure that will help promote American innovation."

The HALOS Act would:

• Clarify SEC rules to ensure that showcasing of products and ideas at "demo days," pitch competitions, and community economic development events are not treated as "general solicitation" under federal securities law so long as:
  • The startup does not advertise investment terms;
  • The event sponsor does not offer investment advice, negotiate terms, or receive compensation for connecting issuers and investors.

This bill is endorsed by the National Venture Capital Association (NVCA). Bill text can be found here.