The 2012 Jumpstart Our Business Startups (JOBS) Act was intended to – not surprisingly, given its name – stimulate the economy by making it easier for companies to raise money and comply with reporting requirements. Among other provisions, the Act raises the threshold at which private companies with shareholders need to register with the SEC, boosting the number from 500 to 2,000 shareholders, according to this summary from McGladrey. It also exempts from registration “crowdfunding,” or limited size offerings sold in small amounts of large numbers of investors, typically via the Internet.
When the Act passed, it was praised as “a giant step for entrepreneurship in America” and “a fantastic development in early stage finance that has the potential to disrupt the very way in which early stage startups get off the ground.” The very cost of going and being public has been seen as a significant deterrent to many companies. Indeed, a 2011 survey by Ernst & Young found that companies spend an average of $2.5 million just to be a public company, plus the cost of IPO itself.
To read the original article: Crowdfunding: Jobs Creator or Investor Threat? | Business Finance
