Yesterday, September 23, 2013, a new law went into effect allowing small businesses and entrepreneurs can now advertise capital needs via crowdfunding thanks to Title II of the Jobs Act.
Small start-ups can now ask for equity investments publicly, such as through social media sites or elsewhere on the Internet, without having to register the shares for public trading. The legislation is part of the 2012 “Jumpstart Our Business Start-ups Act,” or JOBS Act, which was meant to encourage new business growth.
This means a great deal for entrepreneurs all over the nation who have great ideas, but no way to fund projects.
It should be highlighted that although this is a great opportunity, there is also a second part (not yet made effective) that will permit “crowdfunding” from the general public.
You may be familiar with crowdfunding thanks to sites like Kickstarter and Indiegogo, which have significantly benefited startups. But these sites do differ from what is currently allowed as they solicit donations, not equity investments.
Critics are uncertain whether or not the new crowdfunding rules in the JOBS Act will succeed in nurturing new businesses, or create new problems related to quick growth, untested business models and inexperienced startups. However, many are thrilled claiming the law represents a new advancement in US entrepreneurship.
Do you have an idea you would like to start? Consider one of our many open source PHP scripts for your startup business:
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