Bill Overview
Title: HALOS Act of 2022
Description: This bill directs the Securities and Exchange Commission (SEC) to revise Regulation D, which exempts certain offerings from SEC registration requirements but prohibits general solicitation or general advertising with respect to such offerings. Specifically, this prohibition shall not apply to events with specified kinds of sponsors—including angel investor groups unconnected to broker-dealers or investment advisers—where presentations or communications are made by or on behalf of an issuer, if the advertising does not refer to any specific offering of securities by the issuer; the sponsor does not provide investment recommendation or advice to attendees, engage in investment negotiations with attendees, charge certain fees, or receive certain compensation; and no specific information regarding a securities offering is communicated beyond the type and amount of securities being offered, the amount of securities already subscribed for, and the intended use of proceeds from the offering.
Sponsors: Rep. Budd, Ted [R-NC-13]
Target Audience
Population: Entrepreneurs, startups, and angel investors engaged in unregistered securities offerings
Estimated Size: 1000000
- The term 'angel investors' generally refers to affluent individuals who provide capital for startups, usually in exchange for ownership equity or convertible debt.
- The primary focus of the HALOS Act of 2022 is to relax certain solicitation and advertising restrictions for startups and small businesses seeking investments at events sponsored by qualified angel groups.
- By making it easier for startups to present to potential investors without violating SEC regulations, the bill impacts entrepreneurs and small businesses looking to raise capital through such events.
- Angel investors include individuals with a high net worth who are interested in investing in early-stage businesses. This usually involves individuals in developed countries with sophisticated financial markets.
Reasoning
- The HALOS Act primarily targets startups and angel investor groups, making it easier for startups to find investments, potentially enhancing their ability to grow and create jobs. The impact of the policy will differ based on an individual's role in the startup ecosystem, whether they are an entrepreneur, an investor, or someone indirectly connected.
- This policy changes solicitation rules, beneficial mainly to startups but less so to those who are not part of such ecosystems (e.g., employees in established sectors or individuals outside the startup and investment communities).
- The budget constraints suggest the need to target smaller, focused startup communities and prominent angel networks initially, because a wider reach might exceed financial resources.
- High impacts will be seen among individuals whose professional lives are directly tied to startups, while those in other sectors might see indirect or minimal impact.
Simulated Interviews
Tech Startup Founder (San Francisco, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The HALOS Act could make it easier for me to connect with potential investors without worrying about SEC regulations.
- Presenting at angel events is crucial for my startup's funding strategy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 8 | 6 |
Angel Investor (Austin, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 4/20
Statement of Opinion:
- I'm supportive of the HALOS Act as it facilitates finding promising startups.
- Clear regulations mean better opportunities for informed investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Lawyer specializing in startup law (New York, NY)
Age: 38 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 3/20
Statement of Opinion:
- The changes in solicitation rules mean less complication for my clients, which could boost their growth.
- I'll need to adjust my legal advice to align with the new rules.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Product Manager in a Tech Startup (Chicago, IL)
Age: 27 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 7/20
Statement of Opinion:
- I see potential benefits if my company decides to fundraise in the future.
- Currently, the policy doesn't impact my day-to-day work.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Business Consultant (Miami, FL)
Age: 55 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 8/20
Statement of Opinion:
- Most of my work doesn't involve startups directly, so the policy might not significantly affect me.
- Interested to see if startup growth will change the general business environment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
CEO of a Biotech Startup (Seattle, WA)
Age: 42 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- The HALOS Act is a game-changer for our fundraising strategies.
- Reducing advertising restrictions aligns with how startups naturally operate.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 7 |
Venture Capitalist (Los Angeles, CA)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 2/20
Statement of Opinion:
- The policy potentially increases deal flow from angel-backed startups, which could be positive for my investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Small Business Owner in Retail (Boulder, CO)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- This policy doesn't affect my business as we do not engage in large fundraising activities.
- I am curious if increased startup activities will create more service demand.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Software Engineer (Boston, MA)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 6/20
Statement of Opinion:
- While not directly involved in fundraising, I'm aware this policy might expedite my company's growth trajectory.
- Interesting as a potential entrepreneur in the future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Investor Relations Specialist in a Fintech Startup (Raleigh, NC)
Age: 48 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 4.0 years
Commonness: 2/20
Statement of Opinion:
- The HALOS Act is great for streamlining the communication between startups and investors.
- Might simplify some of my advisory processes drastically.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $2000000 (Low: $1500000, High: $2500000)
Year 2: $1500000 (Low: $1000000, High: $2000000)
Year 3: $1000000 (Low: $500000, High: $1500000)
Year 5: $500000 (Low: $250000, High: $750000)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The Act aims to relax certain current SEC restrictions, thus facilitating startups in raising capital through angel investors at events without explicit offers, provided compliance with specific conditions.
- Administrative costs and initial regulatory changes are expected to be covered by the SEC's existing budget allocations, but monitoring activity could temporarily increase costs.
- Long-term success heavily depends on how effectively startups can utilize newfound flexibility in accessing capital.