Jumpstart our Business Startups Act (JOBS)
Candlefocus EditorIn particular, the JOBS Act loosens regulations on public reporting, oversight, and advertising. Companies now have more freedom to use effective advertising and marketing to attract investors, and they can do so without the same level of scrutiny they faced before the JOBS Act. Companies with less than $1 billion in revenue now only need to disclose basic financial information when trying to obtain financial support. This makes it easier for entrepreneurs to start businesses without pre-existing capital.
The JOBS Act also introduces another concept: equity crowdfunding. This allows non-accredited investors to make investments in start-ups. This form of mini-initial public offerings (“mini-IPOs”) has made it easier for entrepreneurs to get their businesses off the ground without relying on traditional sources of financing.
The main idea behind the JOBS Act was to help entrepreneurs get their businesses up and running in the wake of the 2008 financial crisis. The law’s deregulation of public reporting, oversight, and advertising is seen as a way to spark a revival in small businesses and create jobs. In fact, some observers believe that the legislation had a positive effect on businesses seeking to procure capital, noting that the number of public offerings has grown significantly in the wake of the JOBS Act’s enactment.
However, the JOBS Act’s loosening of regulations also brings some risks. One of the chief among them is the potential for investor fraud, as there is now less oversight of public offerings. This can be a particular issue in the case of equity crowdfunding, where investors may be more vulnerable to being taken advantage of.
All in all, the Jumpstart Our Business Startups Act of 2012 is a landmark piece of legislation. Its main intention was to make it easier for businesses to access capital and create jobs. The deregulation it brought about has helped businesses seeking financial support, but also carries certain risks. It is now up to entrepreneurs, and the authorities responsible for keeping the situation in check, to make sure that the potential of the JOBS Act is realized.