The JOBS Act: Two years later, are we using it to its best potential?

The JOBS Act: Two years later, are we using it to its best potential?

It seems like just yesterday that United States President Barack Obama officially signed the JOBS Act into law. In fact, it’s been around for just over two years. But many questions still remain as to how it’s working, and whether or not we’re really taking advantage of it. The JOBS Act was a major victory for small businesses, and new companies looking to raise investment capital with fewer restrictions. In essence, it was built to level the playing field and let any business or investor compete with bigger companies by deregulating how, and how much funding they could operate with. Here’s a look at what it’s done so far, and how investors and businesses can truly harness its full potential in the future.

How the JOBS Act Works
The Jumpstart Our Business Startups (JOBS) Act was signed into law in April 2012, and went into effect in September 2013. The JOBS Act provides a number of provisions focused on small business growth, but two major benefits were its sticking point. First, it opened up, and deregulated solicitation between private companies and interested investors. This meant that emerging growth companies raising capital could use resources like the web, direct mailing, and direct calling to solicit investors.

The second major benefit provided in the JOBS act was that it allowed non-verified accredited investors to openly compete and negotiate with interested companies for private placements. Before the JOBS Act this was much more limited. It was dominated, almost strictly, by verified accredited investors. The act’s main purpose was, and is, to lay the groundwork for startups and new investors to get a head start, and encourage innovation in the small business/small company sector. The JOBS act deregulated nearly a century’s worth of tight SEC regulations that made rookie investment difficult, if not downright impossible for some.

Is the JOBS Act working?
That, like anything else, depends on whom you ask. But to really understand the impact of the JOBS Act, and its future potential, we need to understand the importance of Title III. You see, in order for the act to work, all titles must be individually approved as they roll out. So far, only Title I and II of the JOBS Act have been put in effect. Title I and II do allow for the reopening of capital markets to emerging growth companies, and grant unprecedented access to capital for job creators, however Title III is critical. Title III is the part of the act that deregulates crowdfunding sources, and without it, many new and unaccredited investors are getting left out in the cold.

According to a recent interview with, Rory Eakin, co-founder and chief operating officer of equity crowdsourcing platform CircleUp says “I don’t anticipate Title III to be adopted any time soon. We are following this closely, and in touch with people around the Hill, and our view is that it’s not likely to come to pass.”

Now, this doesn’t mean that unaccredited investors can’t access private investment deals. It just means that they have to take a different route to do so, and that may mean losing potentially bigger companies in the process. In essence, it’s opened up their investment possibilities, but is still holding them behind what accredited investors are able to do. The holding back of Title III is seen by many as a way for the SEC to hold onto some of it’s regulation, while still appeasing both large and small investors with caveats that are mutually beneficiary.

It’s been an interesting two years to say the least. Now, investors and companies need to adapt to the possibility of a long wait for the rest of the titles to pass. What they do with the JOBS Act in the meantime, is up to them.

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