The Art of Startup Fundraising

15Understanding the JOBS Act

A lot has changed in 80 years, and it's time our laws did as well.

—Barack Obama

The signing of the Jumpstart Our Business Startups (JOBS) Act may well go down in history as one of the greatest moments during Obama's two terms in the White House. Perhaps the only ones to disagree with this are some big banks, lenders, investment salespersons, and financiers who have lost their power to the democratization of investment and fundraising.

The Game Changer

The JOBS Act, which was initially signed into law in April 2012, changed 80 years of securities regulations and legal precedents. ¹

Many forget that our financial system and organization isn't all that old. The New York Stock Exchange has been around for only 200 years. Its smaller predecessor, the London Stock Exchange, has been around for only about 300 years. Prior to that there was little organization. “Traders” met and exchanged notes in coffee houses or pooled venture capital to fund exploration and merchant ships.

The U.S. Securities and Exchange Commission (SEC) was officially founded in June 1934 ² and now regulates the industry, enforces federal security law, and poses new rules. The SEC was born out of a need to protect consumers and maintain organization, and its first chairman, Joseph Kennedy, was appointed by President Roosevelt.

While the SEC, along with the FTC (Federal Trade Commission), has certainly been a powerhouse for cracking down on bad actors and business practices, both ...