NVCA applauds Senate action on the Securities Investment Promotion Act of 1996

Business Wire, June 28, 1996

WASHINGTON--(BUSINESS WIRE)--June 28, 1996--National Venture Capital Association President Carl Thoma Friday congratulated the United States Senate for their quick action in passing the Securities Investment Promotion Act of 1996. "Today the Senate demonstrated that it can work on an issue important to millions of Americans in a bi-partisan, collegial fashion. We strongly support the provisions contained in S. 1815 and hope that its provisions remain intact through the upcoming conference with the House of Representatives."

Of particular importance to the venture capital industry in S. 1815 is the creation of a new qualified purchaser exemption for funds comprised solely of investors who are sophisticated in financial matters.

"By allowing venture capitalists to establish new qualified purchaser funds, an even greater amount of venture capital will be available to fund emerging growth companies across America without threatening investor protection," noted Thoma.

NVCA believes that the Senate bill as it now stands will help venture capitalists assist the growing entrepreneurial sector, but as Daniel Kingsley, NVCA executive director noted, "We believe that any changes to the Senate-passed qualified purchaser provision similar to what is contained in the House-passed measure would make it of no practical importance to the venture capital community."

NVCA urges the House-Senate conference to retain the Senate qualified purchaser language when it meets to discuss this bill. As Thoma noted, "In doing so Congress sends a powerful message to venture capitalists and their investors that emerging companies are a critical and integral part of the growing U.S. economy."

S. 1815 defines a qualified purchaser as a natural person who owns $5 million or more in investments or an institution that owns or manages $25 million or more in investments. It also allows the Securities and Exchange Commission to define additional classes of qualified purchasers.

In contrast, the House-passed bill defines a qualified purchaser as a person who owns $10 million or more in securities or an institution that owns or manages $100 million in securities. The House bill also does not give the SEC discretionary authority.

The National Venture Capital Association is composed of over 230 professional venture capital organizations with more than $30 billion of capital under management. Its affiliate, the American Entrepreneurs for Economic Growth is the largest organization of entrepreneurs focusing on public policy issues consisting of nearly 10,000 entrepreneurs who employ over one million Americans.

CONTACT: National Venture Capital Association, Arlington, Va.

Mark Heesen, 703/351-5269