Last week, the president signed into law the Jumpstart Our Business Startups, or JOBS, Act. The law, supported by House Majority Leader Eric Cantor, R-Virginia, gathered bipartisan approval, with the House passing the measure 380-41 and the Senate by 73-26. Essentially, the law makes it easier for businesses to raise money. Among the changes:
• The JOBS Act contains a “crowd-funding” provision that allows entrepreneurs to raise up to $1 million annually from large groups of individual investors, using Web-based platforms registered with the Securities and Exchange Commission.
• The law also makes it easier for companies to initiate initial public offerings by adjusting various rules related to corporate governance and accounting. Companies with less than $1 billion in annual revenue would have up to five years to enact certain regulatory requirements.
• It allows for an expansion of so-called “mini public offerings,” increasing the threshold from a little-used $5 million to a more robust $50 million. This provision exempts certain companies from some SEC requirements.
“America's high-growth entrepreneurs and small businesses play a vital role in creating jobs and growing the economy,” Obama said in a statement. “I'm pleased Congress took bipartisan action to pass this bill. These proposals will help entrepreneurs raise the capital they need to put Americans back to work and create an economy that's built to last.”
These provisions have created excitement from the nation's entrepreneurial and startup community, helping to streamline the process that companies must follow to raise funds. While protection of investors is important, many provisions adjusted in the JOBS Act did nothing but frustrate entrepreneurs and add costly measures for business. Thankfully, Congress and the Administration saw that there was a better way.
We're encouraged by the passage of the JOBS Act, but we wish it had included some other provisions, such as the Startup Visa changes that would make it easier for foreign entrepreneurs to launch businesses in the United States.
Still, in this political climate, we'll take what we can get.
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