Access to Capital Funds for Rural Start-Ups: the Goal of a 2017 Bi-partisan Bill

“North Dakota and other areas have no shortage of ideas and talent, but there is a challenge to find funds and investors in rural areas,” explains Senator Heidi Heitkamp (Democrat, North Dakota). Currently, one of Heitkamp’s committee assignments includes serving on the Senate Committee on Small Business and Entrepreneurship. “I am myopically focused on supporting small business and start-ups of North Dakota,” continued Heitkamp.

Currently, an Act presented by Heitkamp and Senator Dean Heller (Republican, Nevada) is set to change the landscape of venture capital funds in the United States, especially impacting rural areas like Fargo, North Dakota. The two senators have submitted the Supporting American Innovators Act of 2017 (S.444). “The current regulation of 100 investors placed on venture fund organizations leads to fewer capital funds in rural places…and the bi-partisan bill put forward by myself and Senator Heller raises the number of investors to 250 before requiring registration with the SEC,” explained Heitkamp. As of mid-March 2017, the Supporting American Innovators Act has passed in the House, as well as the Senate Banking Committee. Later in 2017, the bill will be presented to the Senate and House floor for debate and a potential vote.

Heitkamp’s meeting with then-nominee Linda McMahon who is now the Small Business Administration (SBA) Administrator. During that meeting, Heitkamp invited McMahon to North Dakota to see the state’s startup innovation in person, and she accepted.

Investment funds and American History

Historically, why is the Supporting American Innovators Act important for capital investment funds?

In 1933, Congress passed an Act that created the Securities and Exchange Commission (SEC). Seven years later in 1940, the Investment Company Act and the Investment Advisers Act were passed setting in place the definitions and rules for investment funds in the United States. Since this legislation became law over 70 years ago, capital venture funds have been regulated by the same rules. In 2012, the Jumpstart Our Business Startups Act was passed to assist businesses raise capital funds, but the act still kept a regulation that investment funds could not have over 100 accredited investors before registering with the SEC. This new bill presented by Heller and Heitkamp seeks to update the more than 70-year-old regulation defining the number of investors before registering with the SEC. 

Heitkamp at the Prairie Den

Ahh, yes. The infamous Graffiti Board Room at the Prairie Den. Hopefully Senator Heitkamp will be back in our office soon!

Potential Impact for Fargo Start-Ups

The impact of the Supporting American Innovators Act will be seen in the years to come if the bill is approved later this year. However, Jake Joraanstad of Fargo start-up company Myriad Mobile sees the benefit for the entrepreneur community here in Fargo from this type of legislation. “Myriad Mobile has seen the positive impact from previous legislation such as the Startup Entrepreneur Empowerment Delivery (SEED) Act of 2016….and I anticipate this new bill, which increases the potential number of investors in a capital venture fund, will open up more opportunities for future start-ups in need of capital funds to further their businesses,” explained Joraanstad.

The need for capital funds is a shared characteristic of companies getting their start. This is especially true of start-ups in the Fargo entrepreneur community where one-third of all start-ups identify early financial investment as a hurdle to growth. In reference to finding possible capital funds, Jake Joraanstad shares, “In 2017, Myriad Mobile will be seeking new capital investment in a new company (mAgri) that has grown out of Myriad’s work…..we will be seeking capital funds soon and this legislation could benefit us greatly moving forward.”

Follow the progress of the American Innovators Act (S.444) on the Congress website.

Brent McNeal

Brent McNeal

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