Earlier this month, President Obama sign the JOBS bill into law with strong bipartisan support, and no this isn’t the one you’re thinking of. This one is designed specifically for funding start-ups with a particular focus on crowd funding (i.e. Kickstarter).
Explained by author and professor, Jeff Jarvis:
The JOBS bill being signed by President Obama today is critical to the emergence and growth of the next generation of industries as ecosystems.
Those ecosystems are made up of three layers: platforms, entrepreneurial ventures, and networks.
Platforms (Google, Amazon, Salesforce, Facebook, Kickstarter, Federal Express, Foxconn), which make it possible for entrepreneurial ventures to be built at lower cost with less capital and reduced risk at greater speed. To provide the critical mass that large corporations used to provide — to, for example, sell advertising at scale or acquire distribution or acquire goods or services at volume — sometimes these ventures need to band together in networks (Glam, YouTube, Etsy, eBay).
The bill supports this flourishing start-up trend by updating some outdated laws, from the 1930s, and correcting some from the Sarbanes-Oxley Act of 2002.
Of interest to us, the regular people:
- Entrepreneurs can raise up to $1 million per year through those approved crowd funding channels.
- Investors with incomes of less than $100K will be limited to 5 percent, or $2K, investments.
- Those who make over $100K/year will be limited at 10 percent, or $10K.
Previously, one could not sell equity through crowd funding and only registered investors with $100,000 could fund a company. Now, with the crowd sourcing provision anyone can get in on the action.
This is great for the industry and those with a nose for investing, but do be wary. Internet scammers and unskilled entrepreneurs will soon be asking for your money to fund the next Google.
Learn more about the bill – Jumpstart Our Business Start-ups (JOBS) Act
// Photo – Guano