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House passes startup-friendly bills as part of ‘innovation initiative’

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Toby Taft
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Tuesday was a good legislative day for Silicon Valley.Pushing full steam ahead on the  Innovation Initiative spearheaded by House Majority Leader Kevin McCarthy, The House passed two bills designed to make it easier for startups to raise funding.The first, the Fix Crowdfunding Act, ups the limit that startups can raise on equity crowdfunding platforms from $1 million to $5 million, The Hill reported.

It received an overwhelming majority — passing 394-4.

The bill would amend rules that went into effect in May — expanding equity crowdfunding even further.

Before the May rule change, startups seeking to raise money via crowdfunding were mostly restricted to platforms like Kickstarter, where they could offer donors T-shirts and other swag, but not equity in their company.Crowdfunding, both with and without the promise of equity, has become a popular method for early-stage startups to raise capital.

In 2014 crowdfunding campaigns raised $9.46 billion in North America, and the industry had an annual growth rate of 145 percent, according to a study published last year by crowdsourcing research and advisory firm Massolution.The second bill to pass in the House on Tuesday is the Supporting America s Innovators Act 0f 2016, which would expand the limit on investors engaging in early-stage funding from 100 to 250, The Hill reported.Both bills face their next test in the Senate.Speaking on the House floor Tuesday, McCarthy said the bills are designed to restore the original spirit of the JOBS Act.They are intended to harness innovation and bring together millions of Americans with potential new businesses through crowdfunding, he said.

These new businesses could become the next Apple or Under Armour.

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