More than a year after the JOBS Act was signed into law, one of the most important provisions – small businesses raising money from regular people – may finally be coming into effect.
The U.S. Securities and Exchange Commission is expected to vote on rules around equity crowdfunding at an open meeting that has been called for Wednesday, Oct. 23.
Meanwhile, a bipartisan group of senators today released an open letter to SEC Chairwoman Mary Jo White asking to expedite its crowdfunding proposal. “It has now been over 530 days since the JOBS Act became law, and we have not seen a proposal from the SEC on crowdfunding. We are concerned that so much time has passed without action,” the letter said.
The big deal here is the loosening of restrictions on what are known as accredited investors – currently, those with self-reported income exceeding $200,000 in each of the two most recent years, or net worth of $1 million.
The JOBS Act would allow approved crowdfunding portals to help startups raise money from people with a net worth of less than $100,000, as long the investment doesn’t exceed five percent of their income or net worth, and the companies don’t raise more than $1 million from the crowd per year.
While this has the capacity to alter the market significantly, the biggest and best-known crowdfunding platform, Kickstarter, has said it has no interest in equity crowdfunding. Lots of other companies do, though.
Other parts of the JOBS Act have already been implemented; in September, a ban on advertising prospective investments to the public, called “general solicitation,” was lifted.