Small businesses and start-ups have greater leeway in advertising for investors with the recent passage of a revision to the JOBS Act of 2012, regarding Securities and Exchange Commission rules, that enables small companies to publicly announce efforts to raise money. Regulation previously in effect dated from 1933, long before social media became a staple in communication, and limited small businesses and start-ups to soliciting only investors they already knew and whose income and assets met certain thresholds.
While the new rule does not expand who businesses can allow to invest in them, it does provide more ability to attract attention to fundraising efforts by allowing small business to conduct general advertising to find investors, explains Congressman David Schweikert (R, Az. Dist. 6), co-sponsor of the JOBS Act. “This, in turn, will allow companies to find qualified investors more easily, which ultimately will enable them to grow and create jobs,” he says.
New rules regarding investing, approved by the SEC and now in the “comment period,” are poised to be finalized next year to allow investors to buy stock in companies over the Internet using a crowdfunding exchange.