Understanding the Jumpstart Our Business Startups Act

The Jumpstart Our Business Startups Act, also known as the JOBS Act, was signed into law in 2012 to help small businesses grow and raise capital.

The law was enacted to address the challenges faced by small businesses in accessing capital markets. One of the main goals was to allow companies to raise capital more easily.

The JOBS Act made several key changes to existing securities laws, including allowing companies to file confidentially with the Securities and Exchange Commission (SEC) before going public. This change was intended to reduce the burden on small businesses and give them more time to prepare for an initial public offering (IPO).

Companies with less than $1 billion in revenue are eligible to take advantage of these changes.

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The JOBS Act has some key provisions that make it easier for small businesses to access funding.

Companies with less than $1 billion in revenue are exempt from the auditing and disclosure requirements of the Sarbanes-Oxley Act.

The act also includes a crowdfunding exemption provision that allows the public to invest in startups by buying securities from the companies.

The total investment permitted per investor is limited to $2,000 or 5 percent of income (whichever is greater) for people earning up to $100,000, and $10,000 or 10 percent of income (whichever is less) for people earning $100,000 or more.

The JOBS Act increases the number of shareholders a company must have before being required to register with the Securities and Exchange Commission to 500 unaccredited investors, or 2,000 persons total.

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The Jumpstart Our Business Startups (JOBS) Act is a game-changer for small businesses and startups. It was signed into law by President Barack Obama on April 5, 2012.

The JOBS Act is meant to make it easier for startups to raise capital and for retail investors to invest in startups. This is a big deal because SEC rules were previously preventing startups from raising the capital they needed to expand.

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The JOBS Act establishes the category of "emerging growth companies", which are companies with total annual gross revenues of less than $1.07 billion. This category gets lessened reporting and oversight requirements.

The JOBS Act allows companies to access funding in ways that were not allowed before due to securities regulations. It reduced regulation, including oversight and reporting, removed certain barriers, and allowed for new ways of accessing capital.

The JOBS Act has several key provisions that make it easier for private companies to raise capital. These include increasing the maximum number of shareholders of record, allowing general solicitation or advertising, and permitting crowdfunding activities.

Here are some of the key changes to Regulation A under the JOBS Act:

The JOBS Act is a step towards making access to capital more democratized and efficient. It provides new and easy means to access funding, and the internet has allowed small banks to reach investors in a way that only large corporations could before.

The JOBS Act received bipartisan support in Congress, a testament to its potential to boost the startup community. Many notable figures in the tech and startup world, including Google and AOL's Steve Case, backed the bill.

The National Venture Capital Association also supported the Act, describing it as a modernization of regulations that were put in place nearly 100 years ago. This modernization facilitated the use of online services to invest in small companies.

The Act's "equity crowdfunding" provisions allowed companies to sell securities through open platforms, similar to the Kickstarter model for funding artists and designers.

The JOBS Act had bipartisan support in Congress, with many in the technology and startup communities backing it, including Google, Steve Case, and Mitch Kapor.

The National Venture Capital Association described the bill as modernizing regulations that were put in place almost 100 years before, by facilitating the use of online services to make investments in small companies.

The "equity crowdfunding" provisions, also known as "securities crowdfunding", were often likened to the Kickstarter online model for funding artists and designers.

Academic research shows that the Act led to public firms making more acquisitions, doing so more quickly after listing, and also increasing other forms of investment.

Nonprofit organizations like Kiva and Zidisha, which operate crowdfunding platforms for microfinance loans, also welcomed the JOBS Act.

Kiva complies with SEC regulations by making it impossible for lenders to earn a positive financial return, while Zidisha allows lenders to earn interest but complies by not guaranteeing cash payouts.

RocketHub testified in Congress in support of the JOBS Act, wanting to offer equity crowdfunding.

David Weild IV, the former vice-chairman of NASDAQ, also testified before Congress in support of the JOBS Act and is often referred to as the "father" of the Act, given his studies that identified changes to stock market structure that led to its creation.

The first company to complete an initial public offering using provisions under the JOBS Act was Natural Grocers by Vitamin Cottage on July 25, 2012.

The JOBS Act wasn't without its critics. Some proponents of crowdfunding were disappointed that the final version of Title III capped investment at $1 million and required a number of disclosures that could make the exemption unworkable for smaller start-ups.

The Act was also criticized by consumer groups, including the AARP, the Consumer Federation of America, and the Council of Institutional Investors. They argued that the loosening of investment protections would expose small and inexperienced investors to fraud.

Criminologist William K. Black said the bill would lead to a "regulatory race to the bottom" and was lobbied by Wall Street to weaken the Sarbanes–Oxley Act. Labor unions like the AFL-CIO and the AFSCME also opposed the bill.

The House version of the bill was criticized for gutting regulations designed to safeguard investors and legalizing boiler room operations. It also removed certain disclosure requirements, such as the disclosure of executive compensation.

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The Jumpstart Our Business Startups Act, or JOBS Act, has been a game-changer for startups and small businesses. The SEC approved the lifting of the general solicitation ban on July 10, 2013, paving the way for the adoption of Title II.

As of October 2014, Titles III and IV were awaiting more detailed rulemaking by the SEC, which didn't meet its original deadlines. Some have attributed the delay to former SEC chair Mary Schapiro's concerns over her legacy.

The SEC made significant changes to the act on November 2, 2020, increasing the maximum offering amount in Regulation Crowdfunding to $5 million, and in Regulation D to $10 million.

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The JOBS Act has been in effect for a while now, and there have been some significant updates to its regulations. Titles I, V, and VI became effective immediately upon enactment.

The SEC approved the lifting of the general solicitation ban on July 10, 2013, paving the way for the adoption of Title II. This was a major milestone for the act, allowing companies to reach a wider audience.

As of October 2014, Titles III and IV were still awaiting more detailed rulemaking by the SEC, which didn't meet its original deadlines. This delay was partly attributed to former SEC chair Mary Schapiro's concerns over her legacy.

On May 16, 2016, Title III Regulation Crowdfunding rules went live, marking a significant step forward for the act. This allowed companies to raise funds from a large number of people, while still maintaining some level of regulation.

The SEC finally approved the final rules for Title IV, also known as Regulation A+, on March 25, 2015. This allowed companies to offer and sell up to $50 million of securities to the general public, subject to certain requirements.

These rules were published in the Federal Register on April 20, 2015, and became effective on June 19, 2015. This was a significant change, as it allowed companies to raise more money from the public without having to register with every state.

On October 30, 2015, the SEC made further changes to the act, voting to propose amendments to existing Securities Act rules. This aimed to facilitate intrastate and regional securities offerings.

More recently, on November 2, 2020, the SEC made large changes to the act, increasing the maximum offering amount for Regulation Crowdfunding from $1.07 million to $5 million.

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Crowdfunding is regulated by the SEC, which requires transactions to take place through an SEC-registered intermediary. This is a crucial step in ensuring transparency and fairness in crowdfunding.

The SEC has set a limit on the amount a company can raise in a year through crowdfunding, which is $5 million. This is a significant restriction, but it's in place to protect investors and prevent excessive risk-taking.

To give you a better idea of the SEC's regulations, here are the key requirements for crowdfunding:

Reg CF, a part of the JOBS Act, allows private companies to raise up to $5 million from any American, a significant change from the previous restrictions that only allowed fundraising from accredited investors.

The Jumpstart Our Business Startups Act has had a significant impact on the industry and companies alike. It removed regulatory hurdles for entrepreneurs, allowing them to access capital in a more efficient manner and more readily.

The JOBS Act allows companies to access funding in ways that were not allowed before, thanks to the reduction of regulation and oversight. This includes the ability to raise up to $1 million from a large pool of small investors through crowdfunding activities.

With the JOBS Act, companies can now access capital through a broker or a funding portal, and securities issued will be exempt from state Blue-Sky registration. This makes it easier for entrepreneurs to start businesses or grow their current businesses.

Here are some key statistics about the JOBS Act's impact:

The JOBS Act has made it easier for companies to access funding and grow their businesses. One key provision is the increase in the maximum number of shareholders of record that a private company can have before registering with the SEC, from 500 to 2,000.

This change allows companies to keep their private status for longer and avoid the costs and complexities of going public. For example, a company with 1,500 shareholders can continue to operate as a private company, rather than having to register with the SEC.

The JOBS Act also raised the limit for offerings under Regulation A from $5 million to $50 million. This makes it easier for companies to raise capital through small offerings exemptions.

The JOBS Act introduced a new category of "emerging growth companies" that can take advantage of lighter reporting and oversight requirements. To qualify, a company must have a total annual gross revenue of less than $1.07 billion.

The JOBS Act established a new exemption for crowdfunding, which allows companies to raise up to $1 million from a large pool of small investors. This is a significant change from the previous rules, which limited crowdfunding to accredited investors only.

Here are some key details about the JOBS Act's crowdfunding provisions:

The JOBS Act has made it easier for companies to access funding and grow their businesses, and has opened up new opportunities for investors to participate in the markets.

In the US, several organizations have been founded to provide education and advocacy related to equity crowdfunding enabled by the JOBS Act.

The Crowdfunding Professional Association is one such organization, providing education and advocacy for the industry.

The National Crowdfunding Association is another organization that offers education and advocacy for those involved in equity crowdfunding.

CrowdFund Intermediary Regulatory Advocates is also a notable organization that advocates for the interests of crowdfunding intermediaries.

Here are some of the key organizations involved in equity crowdfunding advocacy in the US: