August 18, 2013
As both a young entrepreneur (22 years old) and the CEO of an early stage startup, the proposed new fundraising rules would be detrimental to startups and companies similar to us. The legal and filing fees, hiring of lawyers and staying abreast of all of the legality it would take to correctly proceed with fundraising would be 1.too expensive, 2. time consuming, (our goal as business owners is to build great products and services that will have an impact or solve a problem as well as provide job opportunities. If that time is being spent on making sure at every turn we are following these mandated rules that is more time taken away from actually making our businesses profitable and better) 3. trivial.
The purpose of the JOBS act was to create rules and regulations that would assist startups and companies in raising funding among other things. The rules you are proposing would most likely discourage a lot of potential business owners from pursuing their ideas simply because the legal matters would be too overwhelming or just too expensive.
As with any startup, the funding raising process is not a cut and paste thing. As each and every company is different, funds are raised at various stages. As I can speak from experience, companies raise funds on the level of growth or pursue seed capital in order to help start or move their business along. Lawyers and bankers are typically not on the books simply because they cant be afforded. With the proposed rules and the subsequent penalty (a one year ban from fundraising) for breaking these rules, in my opinion this proposal does not justify the spirit in which the JOBS Act was created.
Most new business owners and existing startups can easily and inadvertently break these proposed rules and regulations due to the fact they simply were unaware or are not able to afford the legal advice of a lawyer. Please consider amending these proposed rules as the Startup community and Wall Street world, which these rules are heavily influenced by are two separate things. I believe that it is truly impermeable that the SEC takes the time to understand the needs of those who are looking to not only put money back into the economy but are solving a problem and attempting to make the world a better place at the same time.