The JOBS Act is a boon for investors and Montana businesses, including start-ups in the high tech and biotech sectors. Montana Sen. Jon Tester played a big role in the inclusion of many elements that will make it easier for Montana businesses to raise much needed capital. More capital means more growth, more development, and more jobs.
The JOBS Act raised the maximum yearly value of securities a company may offer while still benefitting from simplified regulations: the maximum is now $50 million, up from $5 million. In addition, private companies may have up to 2,000 investors, up from 500. This, combined with the change allowing general solicitation and advertising of some private stock offerings, helps raise significantly more capital for new companies. Before the JOBS Act, private companies publicly advertising to raise capital from investors outside of preexisting relationships was illegal, and only large public companies that could afford to be listed on stock exchanges could generally solicit for capital this way. Allowing general solicitation for private companies has the effect of democratizing raising capital in a way never before seen in our country, and this fuels start-up growth. The JOBS Act also addresses a very popular form of raising money, especially online: hello, “crowdfunding,” you’re here to stay. Via crowdfunding, private companies can now raise up to $1 million annually from an unlimited number of investors. Easing the restriction on general solicitation means that small businesses are freed up to use online solicitations, including crowdfunding, as a powerful, modern way to get off the ground.
It is important to know that businesses seeking to generally solicit must comply with restrictions and requirements such as filing with the SEC to let them know you intend to generally solicit, accept only accredited investors, and disclose details on your general solicitation within the first 15 days of the first solicitation. A business in violation of these requirements will be banned from fundraising for a full year, which can spell doom for a fledgling company. The Missoula-based attorneys of Bjornson Jones Mungas we understand the benefits and pitfalls start-ups face, and we are your best asset in maneuvering the JOBS Act to your benefit.