With new business, money is an important factor. Earning it, investing it, raising it – money is the fuel. The JOBS Act is the spark, and the flame of entrepreneurship is the result.
New Ways to Raise $$
The JOBS (Jumpstart Our Business Startups) Act has been to make it easier for small business and startups to access money. And that includes making it easier to identify and connect with potential investors online via crowdfunding. The JOBS Act also makes it easier for average Americans to get in on the game by increasing the likelihood that they can learn about investment opportunities.
Title II and Rule 506(c) lifted the ban on ‘general solicitation', meaning private companies that wish to sell securities no longer have to restrict their marketing to investors with whom they have a prior relationship. However, verification of investor accreditation is required under a Title II placement. What is an accredited investor? For individuals, it's generally someone with a minimum of $200,000 in earned annual income ($300,000 with a spouse) or $1 million or more in net worth (individually, or together with a spouse). Of all the JOBS Act rules, Title II is the most practical and most powerful for companies seeking to raise capital.
Small business entrepreneurs are now permitted to look for and accept investments from so-called ‘retail investors' or average Americans via crowdfunding portals that meet specific criteria, such as being registered with the SEC or FINRA. These retail investors do not need to be accredited investors. Businesses are required to cap funds raised via Title III to $1 million in each 12-month period, and there are also ongoing disclosure obligations. There are many limiting aspects to Title III, so it's usefulness is limited; however, for the right companies, it's still a capital raising tool worth considering.
Title IV of the JOBS Act includes Regulation A+, which permits private companies to raise capital from investors whether or not they are accredited. Under Tier I of Reg A+, up to $20 million can be raised by private issuers. Tier I campaigns require both state-level and SEC review. Under Tier II, the ceiling is $50 million, but issuers are required to report bi-annually to the SEC. Title IV is more practical than Title III, but it still has limited widespread appeal.
At least in part thanks to the JOBS Act, it's now even more advantageous to be an entrepreneur, and it's more fun for regular Americans to watch what's happening in the entrepreneurial scene, because with a few dollars and a crowdfunding campaign, they too can have their say which companies, with which ideas, have a better chance at success.
As then-House Majority Leader Eric Cantor said at a ceremony following the signing into law of the JOBS Act: “…we're committed in America, we're open for business”.
Whether you're an investor or an issuer under Title II, investor verification is still a requirement. Visit at VerifyInvestor.com today and find out more about the confidential, safe and secure method of self-verification and accreditation of potential investors.