Bipartisan Bill Introduced to Spur Capital Formation
Wednesday, November 20, 2013
Earlier this month Senators Robert Menendez (D-NJ) and Pat Toomey (R-PA) introduced the Start-up Jobs and Innovation Act. This bill is designed to spur capital formation for R&D-focused companies in the early stages of development.
It can take over a decade and cost more than $1 billion to bring a single groundbreaking biotechnology treatment from laboratory bench to hospital bedside, and virtually the entire process is funded by private investment. The Start-up Jobs and Innovation Act would encourage the private sector to invest in breakthrough research being conducted at young biotechs and other innovative small businesses across the country.
This Act will promote greater private investment in small business research, encouraging investors to think beyond immediate gains and support the long-term growth of breakthrough innovators. The legislation would allow small companies to partner with their investors via R&D Partnership Structures – an important change that will incentivize early-stage investment and support small business innovation.
An independent study by Ernst & Young (E&Y) estimates that this proposal will create 156,000 jobs while stimulating $10.3 billion in increased investment. The Start-up Jobs and Innovation Act also includes important reforms to the capital gains treatment of small business stock, business expensing for growing companies, and rules governing small firm accounting methods.
The bill is supported by the Coalition of Small Business Innovators (CSBI), a national group of 18 organizations representing research-intensive small businesses. The coalition includes BIO, AdvaMed, CIT and MDMA, among others.