July 30, 2012
As one of the millions of small-business owners in the U.S., I would like to register my strong support of the Jumpstart Our Business Startups Act (JOBS Act). This new law — if appropriately implemented — will greatly ease the regulatory hurdles small firms like mine face when it comes to seeking investors.
The JOBS Act will facilitate the ability of small business owners to raise debt and equity capital. The JOBS Act does this by –
-- Creating new Crowdfunding web portals
-- Allowing small firms to advertise seeking accredited investors
-- Reducing the cost of going and staying a public company for the first five years
Small firms face disproportionate legal, accounting and other administrative costs when it comes to seeking investment. The JOBS Act, passed with bipartisan support and signed enthusiastically by the President, will address many of these unfair burdens.
While realizing that there is a great deal of clarification and detail that the Securities and Exchange Commission (SEC) must provide in its regulations, I urge you NOT TO CREATE YET ANOTHER REGULATORY FRAMEWORK that is overly complex and costly, thereby nullifying any intended benefits of the JOBS Act. The SEC would do well to use a small-business owner's perspective and seek a framework that is straight-forward, streamlined and imposes the lowest necessary level of cost and regulatory risk.
The widely-supported crowdfunding exception will enable small firms to raise up to $1 million per year in small increments through a registered funding portal. This piece of the law surely will improve our access to the lifeblood of any small business: capital.
The requirement that solicitations can only go to accredited investors with whom the business owner has a pre-existing relationship is an insurmountable obstacle because the average small-business owner knows a very limited number of accredited investors (i.e. very affluent people). If written properly, the JOBS Act regulations will give small-business owners greater leeway in seeking accredited investors without having to give up a substantial share of their company to investment bankers or pay large fees.
Despite the claims of some that this law will create new opportunities for fraud, all existing anti-fraud laws remain in place and the new law imposes significant requirements on those operating crowdfunding portals which will enable small firms to raise capital while protecting the average investor.
At the end of the day, what matters most in crafting regulations is developing a framework that is workable. THE WHOLE POINT OF THE JOBS ACT WAS TO MAKE IT EASIER AND MORE AFFORDABLE FOR SMALL FIRMS TO RAISE CAPITAL. I urge the SEC to keep that singular goal at the forefront of any and all regulations moving forward.