08/29/13

JOBS to Open Up Equity Crowdfunding, Tread With Caution

By Andrés Uribe, Expedition PR

The Jumpstart Our Business Startups Act, commonly known as the JOBS act, is inherently a great thing for small businesses. Part of this piece of legislation will serve to amend archaic rulings regarding the advertising of equity issuances to the public. This is aimed at allowing ordinary unaccredited investors the opportunity to have startups advertise their equity offerings to them, and it will also serve to make it easier for accredited investors to invest in early stage companies. These rules will eventually change the options available to small companies when they seek crowdfunding dollars.

crowdfundingWhile these initiatives sound true to their name in seeking to help ‘Jumpstart’ startups seeking early stage investors, the legal ramifications of such amendments are tricky to say the least. The laws that the JOBS act is attempting to amend were put in place in the 1930’s to help protect grandma and grandpa, or any unaccredited investors making less than $200,000 annually or who have less than $1 million in assets, from being swindled out of their retirements by a questionable small business seeking investments. It is for this reason that lawmakers are moving with caution as they attempt to fine tune the amendments that the JOBS act is calling for while still protecting all potential investors.

Without reading all of the crowdfunding exemption of the JOBS Act, here are a couple of points you will want to be vigilant of before you decide to invest in an equity-based crowdfunding campaign.

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