The JOBS Act and What it Means for Your Startup

The Securities and Exchange Commission has been issuing new regulations to define the details of what the JOBS Act really means.

Some new rules will take effect on May 16, 2016.

There are several important titles to the JOBS Act. We’ll cover them here.

We will continue to cover more about the JOBS Act – especially the Crowdfunding and general solicitation exemptions – in the future.

What is the JOBS Act?

In 2012 Congress passed the Jumpstart Our Business Startups Act or “JOBS Act” for short. The purpose of this act was to make it easier for startups and small businesses to raise investment capital. The theory is that helping startups launch and grow can create more new jobs. To do this the JOBS Act modifies existing Federal securities laws.

Here is a quick overview of the most important sections of the JOBS Act:

• Title I reduces reporting requirements for so-called “Emerging Growth Companies”
• Title II of the JOBS Act allows for advertising and general solicitation of stock offerings (within certain specific limitations).
• Title III created the crowdfunding exemption for startups raising investment capital over the internet.
• Title IV gives the SEC the authority to create a special exemption for certain small private offerings of less than $50 million.
• Titles V and VI raise the number of stockholders a company may take on before registration is required.

Upon enactment of the JOBS Act, Titles I, V, and VI took effect immediately. Other provisions have been rolled out as the SEC issues new regulations.

What Does the JOBS Act Mean for the Future of Startup Funding?

The JOBS Act makes raising money for start-ups, easier, quicker and less expensive.  It’s still unclear how big an impact the JOBS Act will have on startup funding as a whole. The online equity crowdfunding and general solicitation exemptions may help a new generation of entrepreneurs raise seed money for their startups. There may be yet another big wave of capital coming for certain kinds of innovative startup companies.

These new exemptions could open up access to capital for your startup. If you have questions about how to work within the JOBS Act regulations to finance your startup call Jim Gulseth of JGPC Law at 925.463.9600 Ex 250 (jgulseth@jgpc.com).

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