The Jumpstart Our Business Startups Act – An act signed into law by President Barak Obama on April 5, 2012 that removes many SEC regulations on small businesses and reduces restrictions on capital raising for small businesses. Specifically, this legislation allows smaller corporations to complete an initial public offering with less than $1 billion in annual gross revenue and to raise capital through crowdfunding (public solicitation of investments in the company).
In an effort to encourage innovation, the JOBS Act helps to ensure that smaller corporations are not so strictly regulated that they cannot launch and ultimately choose go public successfully. Similarly, in an effort to encourage investment in startups, the JOBS Act helps to ease regulation in ways that allow individuals to invest on crowdfunding platforms.
These twin aims were embraced by the Obama administration in the wake of the economic crash of 2008. As a result of the JOBS Act, new crowdfunding platforms have allowed everyday Americans (not just accredited investors) to fund the visions of startups they believe in. This legislation has also allowed dynamic smaller startups to launch successfully. It can be argued that the JOBS Act has done much good for the American economy and has significantly benefited the evolution of American innovation.
Startup Founder: “We may never be a billion-dollar company. But our business was conceived with a vision; and thanks to both our investors and the JOBS Act, we’re set to go public next week.”
Reporter: “What a great manifestation of the American Dream.”