Important! New Law Makes it Easier to Raise Capital

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President Obama signed a new, bipartisan bill “…on Thursday that will roll back restrictions on the way start-up companies can raise money from individual investors.”  In a New York Times article by Mark Landler entitled “Obama Signs Bill to Promote Start-Up Investments" we learn that …”the bill known as the JOBS Act, for Jump-Start Our Business Start-Ups, was a “potential game changer” for fledgling businesses in need of financing. Among other things, it would allow them to raise small sums from investors via the Internet.”

I was interested in how it actually works so I found an article entitled:  “How the JOBS Act Turns Ordinary Joes Into Venture Capitalists.”  It explains that:

The first change, coming in 90 days, will allow businesses engaged in private offerings to publicly solicit funding — in short, they'll be able to let the broad community of investors know they are raising money. Previously, it was illegal for a small private startup to solicit funding like that, unless it was ready to make an initial public offering. And IPOs are major proposition, typically reserved for startups well beyond the early stage, with serious capital behind them.

It goes on to say: 

The new rules on crowdfunding, scheduled to take effect in 2013, will allow laymen and unaccredited investors to buy into these small businesses. At the moment, regulations limit companies to 500 shareholder accounts, and the people who hold them must be vetted and approved. Next year, that number jumps to 2,000 for accredited investors, and becomes unlimited for everyone else: Any average Joe will be able to take flier on the entrepreneurial spirit.

Let us know if you plan to use the new regulations to assist your efforts to raise capital.




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