You may have noticed AngelList’s call to action against the latest SEC JOBS Act ruling. AngelList agrees with our initial assessment of the ruling but read on for their deeper analysis of how the law will affect startups. AngelList proposes that the JOBS Act will defeat their original goal of public fundraising for startups. Reason being that the new rules will be so difficult to follow that startups will solely raise money privately. And with so many startups fundraising privately, they are lowering their chances of raising any money at all. Or they could always find the cash somewhere that is not tracked by the SEC, but does it really need to get to that point? We agree with AngelList that the JOBS Act will result in unintended consequence such as spelling out the failure of thousands of startups – as a result, further stunting American job growth. We agree that what is called for in the JOBS Act is simply unfeasible. We agree with AngelList’s proposed ideas on how to go about investment tracking. The SEC is looking for feedback on potential consequences of their proposed rules. Share your opinion now as there are only 9 days left to comment! What do you think could be possible negative consequences as a result of the JOBS Act? Share your comments here. -Nikki Griggs, Business and Marketing Associate, Tech-Rx
In a recent article by Silicon Valley Business Journal‘s Cromwell Schubarth, an unexpected consequence to last week’s SEC decision has been unearthed. In response to last week’s decision to end the ban on general solicitation, the Angel Capital Association issued a warning. The group warned that many of its thousands of investors will stop investing if forced to submit financial documentation to verify their accreditation as investors. This is an example of another well-meaning but unrealistic program. Contrary to the original intent of the JOBS act, this may be a detrimental repercussion to the startup community. Read the full article here.