The Big Story: Startups call on Congress to lower barriers for investment
More than 130 startup founders, investors, and support organizations from over 35 states worked with Engine to call on Congress to expand the pool of eligible startup investors in a letter this week. The letter went to the House Financial Services Committee, which held a hearing last Wednesday to consider proposals to boost capital formation. Access to capital is one of the first barriers startup founders encounter, and expanding the definition of accredited investor will create opportunities for more people from more communities to invest in startups—which means funding for more founders from different backgrounds. Other organizations and startups echoed support for expanding the definition of accredited investor, to broaden access to capital and help a larger demographic of individuals to invest in innovation.
The Securities and Exchange Commission’s (SEC) “accredited investor” definition limits who can invest in early-stage companies based on individuals’ net worth, income, and professional credentials. According to some estimates, fewer than 19 percent of U.S. households meet the current thresholds, significantly restricting who can invest in early-stage startups and limiting opportunities for diverse entrepreneurs. Expanding the definition so more people can become accredited investors has long had bipartisan support, including in last week’s hearing. In the previous Congress, policymakers advanced several measures to expand the pool of eligible investors—including the Empowering Main Street in America Act and the Expanding Access to Capital Act—both aimed at increasing investment opportunities and broadening capital access for startups.
Congress should swiftly act to expand participation in the startup ecosystem. As the founders, investors, and support organizations told policymakers in the letter, the current definition “restrict[s] the flow of capital that could otherwise fuel innovation, job creation, and economic growth across communities.”Policymakers should enable more Americans to become accredited investors, increasing capital access for startup founders and encouraging broader participation in the startup ecosystem.
Policy Roundup:
Hearing points to renewed focus on addressing digital trade barriers. The House Ways and Means subcommittee on trade convened for a hearing last Tuesday that dove into key trade issues for startups, like data localization, digital services taxes (DSTs), and the impact of tariffs. Lawmakers expressed a desire to restore U.S. leadership on key digital trade issues for startups and the hearing comes after President Trump issued a directive to push back on DSTs and discriminatory regulation abroad.
Policymakers weigh in on small business programs as 2025 expiration looms. The House Committee on Small Business convened for a hearing last Wednesday to discuss the future role of the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs, administered by the U.S. Small Business Administration. These programs have been instrumental in supporting research, development, and commercialization and fostering technological advancements. With SBIR and STTR set to expire in September 2025—and strong bipartisan support for renewing, strengthening, and permanently implementing both programs—policymakers should focus on ensuring better access to both programs, improving program efficiency and broader startup participation.
Confirmation hearing for White House tech policy lead shows strong AI focus. The Senate Commerce Committee convened a nomination hearing last Tuesday for Michael Kratsios to lead the White House Office of Science and Technology Policy that focused heavily on U.S. leadership in emerging technologies like AI. During the hearing, Kratsios underscored the importance of a regulatory environment that enables AI companies to “grow and succeed.”
On the Horizon
WED. 3/05: The Energy and Commerce subcommittee on communications and technology will convene a hearing to discuss how Congress can increase broadband deployment, specifically improving the Broadband Equity, Access, and Deployment (BEAD) Program at 2:00 PM ET.
WED. 3/05: The Senate Committee on Small Business and Entrepreneurship will convene a hearing to discuss improvements to the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs, administered by the U.S. Small Business Administration at 2:30 PM ET.
TUE. 3/25: The House Committee on Financial Services will convene a public hearing to discuss capital access expansion at 10:00 AM ET.
Startup Roundup:
#StartupsEverywhere: Oakland, California. It’s hard to manage the development of learning plans for special education students. Coretta Martin and her co-founder, Bridgette Leslie, are bringing a community-focused approach to this space to bridge the gap between students and their schools with their startup, IEP&Me. We sat down with Coretta to discuss her company, data privacy, and her journey raising capital as an underrepresented founder.
