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house Bill H.R. 1909

Should it be Easier for Startups to Pitch Their Plans to Angel Investors?

Argument in favor

For startups to grow and create jobs they need access to capital early in the process. This bill would accomplish that by making it easier for them to connect with investors through a commonsense, bipartisan reform.

Argument opposed

This bill muddies the waters surrounding the SEC’s definition of accredited investors, and as a result it diminishes important investor protections. Plus the SEC already allows an exemption for certain pitch events.

bill Progress

  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Financial Services
    IntroducedMarch 27th, 2019

What is House Bill H.R. 1909?

This bill would make it easier for startup businesses to attract investments from angel investors  under the Securities and Exchange Commission’s (SEC) Regulation D. It would allow small companies looking to raise funds through the sale of equity or debt securities (like stocks or bonds) to be exempt from advertising requirements at pitch events sponsored by angel investor groups where:

  • Presentations or communications are made by or on behalf of the issuing company;
  • The advertising doesn’t refer to any specific offering of securities;
  • The sponsor doesn’t offer investment recommendations or advice to attendees;
  • The sponsor doesn’t receive compensation for the event, which would require them to register as a broker or dealer or as an investment advisor;
  • No specific information related to a securities offering is communicated (other than information about the number and type of securities to be offered).

Regulation D governs private placements, which are the sale of securities to a select number of accredited investors, and exempts small companies from having to register their securities with the SEC. It looks to restrict participation in private placements to accredited or sophisticated investors who meet requirements related to net worth, income, and business or investment experience that gives the investor financial awareness of the risks associated with their investment.

This legislation would only affect Regulation D with respect to presentations and communications with prospective investors, but not purchases or sales of securities.


Startup companies; potential investors, particularly angel investor groups; and the SEC.

Cost of House Bill H.R. 1909

During the 114th Congress, the CBO estimated that enacting this bill would cost less than $1 million, which would be offset by the collection of fees so the net effect on the federal budget would be negligible.

More Information

In-Depth: Sponsoring Rep. Steve Chabot (R-OH),  House Small Business Committee Ranking Member, reintroduced this bill from the 115th Congress to clarify the definition of angel investor groups and exempt startup “demo days” from the Securities Exchange Commission’s General Solicitation rules

"Access to capital remains a top challenge for many aspiring entrepreneurs, and as a result, expanding opportunities for investment has been a key focus for the Small Business Committee. The HALOS Act would eliminate yet another unnecessary regulatory burden, allowing small businesses to connect with angel investors through 'demo days' to showcase their products and innovations.  Congress must expand new avenues for entrepreneurs to access necessary capital so that small businesses can continue to drive the American economy to record highs.”

Original cosponsor Rep. Brad Schneider (D-IL) adds

“Access to capital is critical and often a challenge for new businesses, and unfortunately some regulations have had the unintended effect of placing additional burdensome restrictions on events where entrepreneurs can introduce their business ideas to potential investors. I am proud to again introduce the bipartisan HALOS Act with Ranking Member Chabot to help remove this roadblock, ensuring entrepreneurs and investors can connect more easily, while still maintaining important investor protections.”

Sen. Chris Murphy (D-CT), who is an original cosponsor of this bill's Senate companion along with Sen. Pat Toomey (R-PA), adds

"Entrepreneurs should be able to realize their dream of starting a business, and investors should be able to back these businesses without a bunch of unnecessary roadblocks in their way. I’m reintroducing the HALOS Act, because when startup companies grow – they grow fast. We should be doing everything we can to support small businesses and entrepreneurs.”

When he introduced this bill in the 114th Congress, Rep. Chabot said:

“When entrepreneurs are looking for ways to access the capital they need to get started, they look at every avenue available to them. If we’re going to help open doors for the next generation, we need to take the same approach. Clarifying the law to give entrepreneurs and investors more certainty and opportunity is a step in the right direction.”

When this bill passed the House last Congress, House Majority Leader Kevin McCarthy (R-CA) said

"The HALOS Act will directly help startups who face the highest risks, but also have the greatest potential. By removing arbitrary rules and allowing angel investors to play a bigger role in funding startups, we give potentially transformative startups more opportunity to get the capital they need early on to stay afloat, grow, and perhaps one day change the world.”

Engine, a policy, advocacy and research organization supporting startups as an engine for economic growth, supports this bill. In a letter to House Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA) expressing support for this bill, Engine's Executive Director, Evan Engstrom, argued that demo days and pitch competitions are necessary for startups: 

"Under current rules, startups presenting their business plans at 'demo days' or pitch competitions—an exceedingly common occurrence within startup communities throughout the country—could unintentionally violate rules banning general solicitation to non-accredited investors if they do not adequately vet their audience to ensure that everyone in attendance is an accredited investor. Limiting pitch events in this way makes it much harder for cash-strapped startups to find the early stage funding they need, particularly if those startups do not already have strong pre-existing relationships with potential investors. For entrepreneurs working in communities without a robust venture capital or angel investor network, demo days represent one of the best ways to find seed capital, generate interest in their business, and even find new customers or clients. Requiring an extensive vetting process to ensure that such public pitches are limited to accredited investors establishes a burdensome regulatory barrier that will simply discourage angel investors and startups from participating. By fixing this unnecessary vetting obligation, the HALOS Act will make it easier for startups to connect with seed investors. The bill would allow startups to spend their precious resources on building their businesses, rather than navigating the regulatory requirements of a pitch event, an activity that’s nearly become a rite of passage in the life cycle of today’s startups."

Americans for Financial Reform (AFR) opposes this bill, as it believes it eliminates important investor protections

"The 'HALOS Act' would permit issuers of unregistered securities to be exempted from safeguards regarding general solicitations so long as such solicitations were made at an ‘event’ sponsored by any of a wide range of non-profit or educational organizations, investor associations, or trade associations. SEC registration requirements are designed to protect investors by providing investors with verified, reliable financial information concerning the securities in which they invest. The JOBS Act made it possible to do broad-based general solicitation of the public for the sale of riskier unregistered securities. But it also required that companies do a good-faith verification that investors were in fact accredited investors who met a range of qualifications indicating they could afford the increased risk of loss associated with investing in unregistered securities. This requirement is an important investor protection. The HALOS Act would eliminate this investor protection for a very wide range of types of issuer events, events that could easily be used to solicit investment from the broader public, including many who are not accredited investors. This exemption is overly broad and would likely lead to losses for investors who are not prepared to take the significant risks associated with purchases of unregistered securities."

Rep. Maxine Waters (D-CA) concurred with AFR in the 114th Congress. She wrote that it may undermineinvestor protections related to the “verification of accredited investor status” for purchasers of the securities being discussed.

This bill has two bipartisan cosponsors (one Democrat and one Republican) in the 116th Congress. 

In the 115th Congress, the House version of this bill had 15 bipartisan cosponsors, including 10 Republicans and five Democrats, and passed the House by a 344-73 vote before stalling in the Senate. A Senate version of this bill in the 115th Congress, sponsored by Sen. Chris Murphy (D-CT) with six bipartisan cosponsors' support (including four Republicans and two Democrats), didn't see committee action.

In the 115th Congress, this bill passed the House by a 325-89 vote before stalling in the Senate and had the bipartisan support of 11 cosponsors — including seven Republicans and four Democrats. A Senate companion bill, sponsored by Sen. Murphy, had four bipartisan cosponsors, including two Republicans, one Democrat, and one Independent, didn't see committee action.

Of Note: In 2014, a total of 316,600 angel investors funded 73,400 companies to the tune of $24.1 billion in the U.S. alone, creating over 264,000 jobs.


Summary by Eric Revell
(Photo Credit: Flickr user Startup Stock Photos)


To require the Securities and Exchange Commission to revise rules relating to general solicitation or general advertising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes.

Official Title

To require the Securities and Exchange Commission to revise rules relating to general solicitation or general advertising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes.

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