HOUSE BILL REPORT
HB 2139
BYRepresentatives Wineberry, Cantwell, Moyer, P. King, Jesernig, Rasmussen and Walk
Promoting small business growth.
House Committe on Trade & Economic Development
Majority Report: Do pass with amendment. (11)
Signed by Representatives Cantwell, Chair; Wineberry, Vice Chair; G. Fisher, Kremen, Moyer, Rasmussen, Raiter, Schoon, Tate, Walk and Youngsman.
House Staff:Bill Lynch (786-7092)
AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT
FEBRUARY 22, 1989
BACKGROUND:
The successful formation, growth, and expansion of entrepreneurial ventures depends heavily on the availability of informal risk capital. Most entrepreneurs have difficulty in accessing these sources of capital. Similarly, many investors have difficulty in identifying solid investments. A report prepared by the Economic Development Executives of Washington recommended the establishment of a computer network to match entrepreneurs with investors in a confidential matching structure. The Department of Trade and Economic Development was directed in the 1988 supplemental budget to establish a clearinghouse for matching investors with entrepreneurs. There is no authority for the continuation of this network at the close of the current biennium.
The state Securities Division recently adopted the Uniform Limited Offering Registration (ULOR) proposal developed by the American Bar Association. This allows small businesses within the state seeking less than $1 million in equity to sell their securities to the public. It is suggested that marketing of the new small business stock offering law is necessary in order for individual investors to be aware of this mechanism to raise equity, to convince investment bankers and other capital companies to sell these securities, and to convince newspapers to carry small business stock offerings.
SUMMARY:
BILL AS AMENDED: The Washington Investment Opportunities Office is created in the Business Assistance Center of the Department of Trade and Economic Development. The office matches entrepreneurs in need of capital with the resources of private investors, institutional investors, and venture capital firms.
The office must maintain a listing of entrepreneurs engaged in manufacturing, wholesaling, transportation services, developing destination tourist resorts, and traded services who are interested in obtaining capital through the office. The office must provide information to entrepreneurs about potential investors and provide investors information about entrepreneurs which meet the investment criteria of the investor. The office also must assist entrepreneurs in obtaining the necessary technical and managerial assistance to attract potential investors.
Financial and proprietary information supplied by investors or entrepreneurs is exempt from the provisions of the public disclosure law.
The Business Assistance Center may charge reasonable fees to persons using the services of the Investment Opportunities Office for the purpose of paying part or all of the costs of the program.
Referrals must be made to the Small Business Innovators Opportunity Program whenever an entrepreneur has a new product which merits the services of the program. Similarly, persons who receive assistance under the Small Business Innovators Opportunity Program must be referred to the Investment Opportunities Office.
The office is directed to publicize their services using the services of local associate development organizations whenever possible.
The office is required to promote small business securities financing in order for business to take advantage of the Uniform Limited Offering Registration (ULOR) law that enables them to raise equity more easily.
The director of the Business Assistance Center may enter into contracts with nongovernmental agencies to provide services under the program.
The office must report to the legislature by December 1, 1989, and each year afterward, on the accomplishments of the office.
AMENDED BILL COMPARED TO ORIGINAL: A technical amendment was made to correct a reference to the appropriate legislative committees that will receive reports from the Investment Opportunities Office.
Appropriation: The sum of $115,000, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1991, from the general fund to the Department of Trade and Economic Development for the purposes of this act.
Fiscal Note: Not Requested.
House Committee ‑ Testified For: Mike Liles, Bogle and Gates; David Mandley, Mandley Capital Partners; Keith Potter, Keith Potter Company; Rich Paulsen, Business Assistance Center, Department of Trade and Economic Development; Carol Vipperman, Small Business Improvement Council; David Dougherty, Director, Business Assistance Center, Department of Trade and Economic Development; Larry Stanley, Small Business Improvement Council; and Rod Bristol, Sudden Printing.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The promotion of the small business stock offering law is necessary in order for that program to become established. The bill will help small business owners raise equity for needed expansions. Entrepreneurs will be able to establish links with investors through the network listings.
House Committee - Testimony Against: None Presented.