JOBS Act: Startups can now solicit and advertise fundraising
September 23 marked a historic day for startups: for the first time in nearly 80 years, startups can publicize investment opportunities almost anywhere — a chalkboard, a local paper, Facebook or Twitter.
Businesses must file with the SEC and review investor W-2s and other investor financial data. Startups can also only accept funds from accredited investors with incomes of at least $200,000 a year for the last two years.
Startups were previously not able to promote their fundraising while banks, venture capitalists and crowdfunding sites could — a gross inequality the 2012 Jumpstart Our Business Startups (JOBS) Act, intended to encourage funding of small businesses by easing securities regulations, sought to redress.
According to one study, just 3 percent of an estimated eight million accredited investors are active in tech startups — meaning startups now can seize the golden opportunity to tap this vast, untapped investor reservoir.
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