A year and a half ago congress passed the JOBS Act (Jumpstart Our BusinessStart-ups) by an overwhelming margin. It was meant to supplant laws that are nearly eight decades old that limit the ability to invest in start-ups and small businesses to banks and wealthy individuals. At the signing ceremony President Obama said, “For the first time, ordinary Americans will be able to go online and invest in the entrepreneurs that they believe in. The wheels of the federal government turned ever so slowly and now a key provision of the JOBS Act will finally fall into place. The SEC has lifted the ban on General Solicitation which means that companies can publicly advertise their fundraising efforts to accredited (high net worth) investors. It is expected that later this year the SEC will publish rules allowing non-accredited investors to participate as well. Fred Wilson, a New York Venture Capitalist, registered his displeasure with the new rules in a recent blog post. He said, “If the SEC’s intention, with these proposed additional rules, is to neuter General Solicitation to the point that it is legal but nobody avails themselves of it, they will succeed.” In addition to precluding non-accredited investors, the […]
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