Small businesses and entrepreneurs have been given a very big opportunity. On April 5, 2012, President Obama signed into law the JOBS (Jumpstart Our Business Startups) Act. Among its aims: to permit small businesses to use the internet to solicit investments and raise capital.
Title III of the JOBS Act is entitled the “Capital Raising Online While Deterring Fraud and Unethical Non‐Disclosure Act of 2012” or CROWDFUND Act. The Act gives small businesses and startups access to a vast amount of capital resources available online by exempting certain limited offerings of their equity from the registration requirements of the federal securities laws. Approximately 98% of businesses which until now had no real access to large‐scale capital raises are now permitted to publicly solicit certain equity investments without being subject to SEC registration and reporting requirements.
Quite literally, the CROWDFUND Act will allow funding by the crowd ― money from the masses. It will stand in contrast to the traditional small business model of relatively few, well‐capitalized owners contributing large sums, a model that prohibited a start‐up company or entrepreneur from infusing a business with adequate capital unless he or she was independently wealthy or had connections who were. The prior registration exemptions will still exist and will continue to be utilized on a large scale. The CROWDFUND Act, however, will go a long way toward leveling the playing field for small businesses and will clear the way for growth, jobs and increased market competition.
Please join Doug Gorman of Hancock & Estabrook, who will discuss this and his recent article and working knowledge surrounding CrowdFunding speaker. Materials to be given out to all that attend.