By Georgina McCreadie on Tuesday 16 December 2014
Engine, a research foundation, has sent a letter to the SEC calling for the agency to finalize the JOBS Act.
The letter has been signed by more than 200 entrepreneurs, inventors and members of the startup community. It has been over two years since Congress passed the JOBS Act (Jumpstart Our Business Startups). The act will allow equity crowdfunding for companies attempting to raise up to $1 million a year as well as additional capital-raising.
Currently, only a small sub set of American investors, just those who qualify as accredited investors, are able to invest via equity crowdfunding. This shuts the door on many retail investors who would be interested and willing to invest if able. Access to capital is often an entrepreneur’s greatest challenge; especially business that are outside the networks of venture capitalists and angel investors, as there are few alternative solutions.
It has been over two years since Congress passed the JOBS Act and the SEC is now over 700 days past its deadline to issue rules that will enable equity crowdfunding and the Reg A+ offering. Thirteen states have taken matters into their own hands and have legalised equity crowdfunding. But this only allows investment within a state’s borders, and so is limited in its impact. And until the SEC passes its regulations the opportunities for entrepreneurs to raise capital and for potential investors to invest in equity crowdfunding campaigns remains very limited.
The signatories of the letter are a “diverse group of entrepreneurs, startups, and investors”. They say in the letter that they are the “key drivers of job creation across the country” and their “community creates 3 million jobs a year”.
The letter makes reference to Title III as, “the much-anticipated crowdfunding provision”. The passing of this bill meant that Congress recognised the important role crowdfunding can play in helping to provide investment to capital starved companies. However, the Commission is still yet to adopt these rules, after they were proposed over a year ago in October 2013.
The letter is ended with the words: “For the sake of economic growth and innovation, we want to emphasize how critical it is for the SEC to finalize the remaining rules as soon as practicable.”
Here’s a link to the Engine letter to the SEC.