Supporting Startups: Will the JOBS Act Expand the Crowdfunding Crowd?
Lane Powell Attorneys Patrick Franke, Jessica Hoerschelmann and Matthew Viers authored an article in Seattle Business magazine’s September 2013 issue titled “Supporting Startups: Will the JOBS Act Expand the Crowdfunding Crowd?” In the article, Franke, Hoershelmann and Viers discussed the Jumpstart Our Business Startups (“JOBS”) Act and the act’s “crowd funding for the masses” provision.
Congress’ passage last year of the popular and bipartisan Jumpstart Our Business Startups (“JOBS”) Act was met with expectations of imminent and fundamental changes to the financing environment for early-stage businesses. Those that saw the JOBS Act as a game-changer focused on the Act’s “crowdfunding for the masses” provisions. Specifically, Title III amends existing law to exempt certain crowdfunding activities (i.e., the use of Internet and social media to raise relatively small individual investments from a large number of investors) from registration with the U.S. Securities and Exchange Commission (“SEC”). While these provisions potentially create a much larger pool of startup investors, Title III also significantly restricts the scope of lawful crowdfunding and establishes new disclosure and other compliance requirements for crowdfunding issuers and intermediaries.