How about crowd-sourcing the funding of your new start-up venture? People have done it. And they have broken securities law in the process. For example, visionary web 2.0 company, kickstarter.com, has helped individuals with new ideas raise modest start-up funds. But these were all donations. Federal securities laws prohibit the people making the donations from receiving equity in return for their money.
But that has changed, the U.S. house and senate have passed the Jump-start Our Business Start-ups (JOBS) Act and President Obama signed it a few hours ago. The law’s main aspect is that small start-ups will be able to solicit modest amounts of funds absent onerous Securities and Exchange Commission reporting and disclosure regulations. There will still be oversight, but not the prohibitively expensive disclosure process previously required under securities law.
The major points of the act are discussed at crowdsourcing.org. The text of the act is here.
Click to Follow Us!