Developing and Empowering Our Aspiring Leaders Act of 2022

Floor Speech

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Ms. WATERS. Madam Speaker, I move to suspend the rules and pass the bill (H.R. 4227) to require the Securities and Exchange Commission to revise the definition of a qualifying investment, for purposes of the exemption from registration for venture capital fund advisers under the Investment Advisers Act of 1940, to include an equity security issued by a qualifying portfolio company and to include an investment in another venture capital fund, and for other purposes, as amended.

The Clerk read the title of the bill.

The text of the bill is as follows: H.R. 4227

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.

This Act may be cited as the ``Developing and Empowering our Aspiring Leaders Act of 2022''. SEC. 2. DEFINITIONS.

Not later than the end of the 180-day period beginning on the date of the enactment of this Act, if the Securities and Exchange Commission determines the revisions would facilitate capital formation without compromising investor protection, the Commission shall--

(1) revise the definition of a qualifying investment under paragraph (c) of section 275.203(l)-1 of title 17, Code of Federal Regulations, to include an equity security issued by a qualifying portfolio company, whether acquired directly from the company or in a secondary acquisition; and

(2) revise paragraph (a) of such section to require, as a condition of a private fund qualifying as a venture capital fund under such paragraph, that the qualifying investments of the private fund are predominantly qualifying investments that were acquired directly from a qualifying portfolio company.
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Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.

I support H.R. 4227, the Developing and Empowering Our Aspiring Leaders Act of 2021, introduced by Mr. Hollingsworth. This bill would authorize the Securities and Exchange Commission, or SEC, to revise its rules on venture capital investment regulations to allow investments acquired through secondary transactions or investments in other venture capital funds to be considered as qualifying investments for venture capital funds.

Importantly, the SEC would only be required to revise its rules if it finds that the revision would facilitate capital formation without reducing investor protections.

I want to ensure startups and small businesses have access to capital, but as this bill stipulates, access to capital should not come at the expense of investor protections. This bill strikes the right balance, and I so urge my colleagues to support this bill.

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Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.

I support H.R. 4227 and urge its passage as it correctly balances the need to provide access to capital for startups and other businesses with the need to protect investors. I note that a similar version of this bill previously passed this Chamber by a wide bipartisan vote.

Madam Speaker, I yield back the balance of my time.

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