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Tech upstarts to pocket up to $5m from crowd-fund suckers, er backers

When I started out, all I had was just a dream ... and millions in donations

A pair of newly passed bills in the US Congress will increase the amount of money tech startups can raise to cover their early expenses.

The Fix Crowdfunding Act (HR 4855) and the Supporting America's Investors Act (HR 4854) will raise the limits on money that companies can gather through crowdsourcing and venture capital channels.

Both bills were penned by Congressmen Kevin McCarthy (R‑CA) and Patrick McHenry (R‑NC), and passed today by the House of Representatives. Their next steps will be taken in the Senate, where they are expected to enjoy an easy walk into the law books.

Congresscritters hope that the bills will ease the process for startups wanting to raise money outside of the traditional bank loan.

The Fix Crowdfunding Act looks to raise the maximum amount of money a startup can gather from crowdfunding efforts from $1m to $5m. This, in turn, should help companies seeking to raise money to support them through their early (profit averse) years. The act passed with a lopsided vote of 394‑4.

Meanwhile, the Supporting America's Investors Act will increase the number of "angel investors" a single startup can declare from 100 to 250 people. This, in turn, will allow startups to gather larger piles of cash from venture capital firms. That act passed the house by a vote of 388‑8.

"Small businesses and entrepreneurs are America's true job creators, especially in communities like those I represent in western North Carolina," McHenry said of the bills' passing.

"But today, they face a capital crisis. Small business lending from traditional banks is way down, and America's smallest communities are losing more jobs than they create."

The bills are both part of a larger Innovation Initiative that Congressional Republicans are pushing ahead of the November elections. The campaign includes bills to overhaul business funding laws, broadband regulation (including the ill-fated No Rate Regulation of Broadband Internet Access Act, and laws to strengthen penalties for theft of trade secrets. ®

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