A Way Forward For The JOBS Act

On a sunny day in the Rose Garden last April, the President signed the auspiciously named Jobs Act into law. Surrounded by legislators from both parties, the President heralded the law as a ‘game changer’ for startups and small businesses.

One year later, the 28M small businesses that account for nearly one third of the nation’s workforce are still waiting. The SEC clearly has reservations about implementing key portions of this law; most notably the lifting in the ban on general solicitation (advertising) and establishing a new ‘crowdfunding’ exemption.

The fault lies not with the regulators, but with the law itself. The Jobs Act is in fact a messy amalgamation of several different bills. Critics have rightly pointed out that most of the provisions have little to do with actually creating jobs. It would be difficult to argue that allowing large long/short hedge funds to advertise for more capital is the most efficient path for creating jobs.

But, there is a path forward. The SEC should adopt a phased implementation of the bill, initially opening up advertising only for direct investments in small businesses that have less than $50M in revenue.

The benefits of such a staged approach are many. First, it follows Congressional intent. Even a cursory survey of the Congressional record demonstrates that lawmakers were voting to “better facilitate access to capital for our nation’s startups and small businesses,” in the words of three US Senators who urged implementation last summer. In the debate, there was little public advocacy for improving hedge fund capital formation.

Second, opening this smaller market initially reduces the risk for regulators who are clearly uncertain about the impact of an immediate full implementation of the law. In fact, in 2012, direct investments into private businesses accounted for only about 12% of the total market for Regulation D Rule 506 offerings. Hedge funds and other pooled investment vehicles account for more than 85% of the market. Implementing the change only for direct investments will allow regulators to study the impact of the change prior to lifting the ban for more complex financial products.

Finally, staged implementation efficiently targets the engine of our economic growth. Investment capital is the lifeblood of small businesses, which collectively account for two thirds of all net job creation in the past two decades. What today takes many companies six to twelve months, can be reduced to a few weeks by letting buyers and sellers in an existing market find each other more efficiently. Without tackling the much more controversial issue of who can invest in these companies (the crowdfunding provision), or adding a penny to national debt, regulators will increase the flow of capital from qualified investors to the most productive areas of our economy.

One year ago today, the President signed the Jobs Act celebrating entrepreneurs and small businesses, and our ‘nation of doers.’ There was no mention of hedge funds. The SEC should follow suit. We cannot let sensible solutions continue to be held hostage by hidden agendas. Implement the lift in the ban on general solicitation for small businesses without delay.

Source: Forbes – Ryan Caldbeck


ForbesThe Ultimate Pre-Launch Crowdfunding ChecklistForbesCrowdfunding is not limited to the platform where you launch your campaign. Instead, it has become a valuable way to transform your idea into a mainstream business. In order to head in that direction, you must execute a number [...]

The AustralianIgniteme heats up crowdfundingThe Australian“The only other comparable film that raised money through crowdfunding would be Crocodile Dundee, but not all funding came from the crowd.” Mr Morello said the idea behind the platform was relatively simple — giving new and bud [...]

DVS Gaming (registration) (blog)Crowdfunding: How Does it Help Indie Developers?DVS Gaming (registration) (blog)2012 is when crowdfunding really blew up, prior to 2012 the average amount of money devs would receive could range from 10k-100k. By today's standards, that's stil [...]

The MemoCrowdfunding has become a 'monster' argues its greatest criticThe MemoBrown has become a thorn in the side of this blossoming industry, even more so as it's clear his blog is now even read by regulators at the Financial Conduct Authority. The Memo sat down with [...]

U.S. News & World ReportNo Cash for Hate, Say Mainstream Crowdfunding FirmsU.S. News & World ReportThe block on mainstream crowdfunding is just the latest blow to far-right activists operating online. In the last 24 hours, neo-Nazi website the Daily Stormer had its domain regi [...]

LivemintFinding the right balance on crowdfundingLivemintSecurities market regulator Sebi (Securities and Exchange Board of India) has been trying to get a handle on digital platform-based crowdfunding since at least 2014, when it issued a cautiously positive consultation paper. It fl [...]

Crain's Cleveland Business'Smaller' gifts can go long way for Clinic's crowdfunding platformCrain's Cleveland BusinessFor an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic's latest fundraising effort has some relatively [...]

Australian Brews NewsBrewery crowdfunding effective overall: PozibleAustralian Brews NewsEquity crowdfunding by breweries overseas has been effective overall, despite some high profile failures, according to Pozible. The largest reward-based crowdfunding platform in the Asia Pacific, [...]

FortuneUncensored Social Network Gab Raises $1 Million in Crowdfunding CampaignFortuneA crowdfunding campaign for Gab, a Twitter-like social network that touts its commitment to freedom of speech, surpassed $1 million yesterday. The company claims it is politically neutral and committ [...]

Crowdfund InsiderIsraeli Crowdfunding Platform ExitValley Self Crowdfunds, Plans UK ExpansionCrowdfund InsiderThe digital platform to book parking anywhere raised $2 million – a portion of that, $270,000, reportedly came from ExitValley. To date the self-crowdfunding offer has raised [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |