what is the jumpstart our business startups jobs act 
the jumpstart our business startups jobs act is a piece of u s legislation that was signed into law by president barack obama on april 5 2012 that loosens regulations instituted by the securities and exchange commission sec on small businesses it lowers reporting and disclosure requirements for companies with less than 1 billion in revenue and allows the advertising of securities offerings it also allows greater access to crowdfunding and greatly expands the number of companies that can offer stock without going through sec registration 12understanding the jumpstart our business startups jobs actthe jobs act is meant to make it easier for startups to raise capital secondarily it is meant to allow retail investors to invest in startups proponents of the legislation contended that sec rules were preventing startups from raising the capital they needed to expand opponents contended that sec regulations exist to provide oversight and transparency which prevent people from defrauding investors the jobs act establishes the category of emerging growth companies which the sec defines as a company that is issuing stock with a total annual gross revenues of less than 1 07 billion during its most recently completed fiscal year 3 the jobs act lessens reporting and oversight requirements for these companies before the jobs act in most cases only accredited investors could invest in startups 1special considerationsthe jobs act allows retail investors to invest in startups in two ways first it lets startups raise up to 1 million via crowdfunding which is a form of investing by many small investors pooling their resources 1 this is different than crowdfunding websites such as kickstarter where people donate money and do not receive equity for their contributions secondly it greatly expands a category under a rule called regulation a or reg a which allows companies to offer stock without going through the process of registering with the sec under the jobs act the expanded reg a often called reg a allows companies to offer up to 50 million in stock each year without needing to meet normal registration requirements retail investors can invest up to certain amounts using both of these methods allowing them access to relatively risky venture capital investments 41history of the jobs actthe purpose of the jobs act is to make it easier for startups and small businesses to access capital primarily because small business activity had decreased during and after the financial crisis when the law was passed with the ability to access financing the jobs act allows businesses to grow and hire more workers which helped put americans back to work after the financial crisis the jobs act rolled back financial regulation in relation to small businesses and obama signed the law in 2012 most small businesses start and grow in the early stages either through personal savings money from family and friends or money from small banks because of the financial crisis many families had little savings and many of the small community banks had disappeared the jobs act seeks to make access to capital more democratized with greater efficiency by providing new and easy means to access funding the internet has allowed small banks to reach investors in a way that only large corporations could before combined with the advent of technology the jobs act removed or adjusted the regulation that made it difficult for smaller businesses to access capital advantages and disadvantages of the jobs actthe primary advantage of the jobs act is that it removed regulatory hurdles for entrepreneurs allowing them to access capital in a more efficient manner and more readily the jobs act removed the solicitation ban allowing entrepreneurs to market their businesses and utilize the internet to reach thousands of potential investors without geographical limitations the same benefit applies to investors as well it allows investors to reach more potential investments without geographical restrictions the primary disadvantage comes from the advantage less regulation with less regulation and decreased requirements for disclosures the potential for fraud is greatly increased for investors this includes purposeful fraud as well as accidental fraud which means less experienced business owners may inaccurately describe their business opportunities decreased regulationeasier access to potential investorsno geographical constraints for entrepreneurs and investorsincreased options for investorsmore accessible and efficient means of accessing capital for entrepreneursdecreased regulationpotential for fraudwho wrote the jobs act the house majority leader at the time eric cantor introduced the jobs act to congress the act was approved with bipartisan support 