JOBS Act Changes Game for Startups

The JOBS Act will enable small businesses to use the Internet to raise up to $1 million in small investments from lots of people, a technique known as crowdfunding. It will allow larger companies to offer up to $50 million in stock to the public without registering with the Securities and Exchange Commission, up from the previous threshold of $5 million. It also will encourage more companies to go public, by exempting them from some SEC regulations in the first five years after an initial public offering.

These provisions “will help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last,” Obama said.

The president called the crowdfunding provision “a potential game-changer” for startups and small businesses.

“Right now, you can only turn to a limited group of investors— including banks and wealthy individuals— to get funding,” Obama said.

But with the JOBS Act, startups and small businesses “will have access to a big new pool of potential investors, namely the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

The legislation also is noteworthy because it was a rare case of the president and House Republicans supporting the same legislation. House Majority Leader Eric Cantor, a Republican from Virginia, stood behind Obama as he signed the bill.

“It’s a straight-up, solutions-oriented bill,” Cantor said afterward. “I hope it represents the kind of bipartisan work that we can accomplish here in Washington over the next few months.”

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