JOBS Act Deregulates the Fundraising Process for Startups

9-23-2013 9-20-36 PM

Entrepreneurs got a legislative boost today as the JOBS act lifts the 80-year ban on general solicitation. The deregulation of general solicitation means that entrepreneurs can now publically announce that they are raising money.

Before the ban was lifted, entrepreneurs could not send mass emails, use social media, or hang billboards announcing that they were actively seeking investors. Those rules have officially changed and startups can now leverage the internet and social networks to attract investors.

The announcement is expected to reduce fundraising time for entrepreneurs, increase the ability of entrepreneurs to get meetings with like-minded investors, and decrease the need to dedicate quite so much time on fundraising, rather than creating, for early stage startups.

The change does not affect the limitation on entrepreneurs to only solicit licensed investors, meaning someone with a net worth over $1 million, or an annual salary over $200,000. This means that while calls for investors are now able to be broadcast publically, startups cannot engage just anyone in an effort to raise money.

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