NVCA Applauds Bipartisan House Passage of the Reopening American Capital Markets to Emerging Growth Companies Act of 2011

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Venture Capital and Startup Communities Now Look to the Senate to Support IPO On-Ramp Legislation

The National Venture Capital Association (NVCA) commended the U.S. House of Representatives for its decisive passage today of “The Reopening American Capital Markets to Emerging Growth Companies Act of 2011.” The provision, introduced in the House by Representatives Stephen Fincher (R- TN) and John Carney (D-DE), will support America’s most promising young companies in pursuit of an initial public offering (IPO). The measure passed as part of the Jumpstart our Business Startups (JOBS) Act, with an overwhelming bipartisan vote of 390 - 23. Attention now turns to the U.S. Senate where an identical measure contained in bill S. 1933 is under consideration.

“Today the House of Representatives voted in favor of a thriving capital markets system and U.S. job creation,” said Paul Maeder, co-founder and general partner of Highland Capital Partners and chair of the NVCA. “We are one important step closer to creating a much needed 'on-ramp' to the public markets for America’s emerging growth companies. This particular provision allows these promising companies to continue on their growth trajectories, further develop their products and services, and hire more employees without compromising investor protection – all at no additional cost to taxpayers. It is a winning proposition all around.”

Both the House and the Senate proposals create a regulatory on-ramp for companies with less than $1 billion in revenues for up to the first five years after an IPO. In addition to offering temporary relief from onerous and costly provisions such as Sarbanes Oxley Section 404b, the measures also allow for these companies to more effectively communicate with investors before, during and after the offering, creating additional safe harbors for additional analyst research coverage and allowing an expanded range of pre-filing communications.

The IPO on-ramp provision passed today was originally introduced in the Senate under the bipartisan leadership of Senators Charles Schumer (D-NY), Patrick Toomey (R-PA), Mark Warner (D-VA), and Mike Crapo (R-ID). The Senate Banking Committee has built a strong record of examination on the legislation, holding a number of hearings on the proposals. Further action on S. 1933 is pending.

Kate Mitchell, managing director of Scale Venture Partners and chair of the IPO Task Force, a private group of professionals who developed recommendations that were used in crafting the on-ramp legislation, expressed optimism for the bill’s ultimate passage:

“Now is the time for the full Senate to add its weight behind passage of S. 1933 so that the positive impact of the law can be realized as soon as possible in the capital markets, where IPO volume continues to fall short of healthy levels,” said Mitchell. “We are pleased that the Senate leadership has signaled its intention to address these issues and support job creation and are hopeful that lawmakers will seize this opportunity to move forward expeditiously. Passage of these bills in both chambers will be evidence that Congress can come together in a bipartisan fashion and enact meaningful changes to support America’s companies, investors and employees.”

About the National Venture Capital Association
Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. According to a 2011 Global Insight study, venture-backed companies accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites its more than 400 members through a full range of professional services. For more information about the NVCA, please visit http://www.nvca.org.

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Carol Sacks
Tenor Communications
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Emily Mendell
National Venture Capital Association
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