Imagine your otherwise batshit crazy neighbor comes up with a big idea. Really big. The type of idea that could become the next Facebook, Twitter, Pinterest, or maybe just the next Coffee Joulies – how much would choose to invest? Let’s say you’re feeling restless and want to invest $1,000. Your neighbor thinks his idea is worth $50k. He’s willing to give you 2% equity in his idea/company if you put your $1,000 toward getting it started. He wants to go online and find 49 other investors. Today, as far as I can tell, there is no legal framework in the United States that allows this. You save $1,000 and you neighbor goes back to drinking bourbon and spying on lawn gnomes.
President Obama, in the interest of gnome privacy, is preparing to sign the JOBS Act into law on Thursday (April 5, 2012). Once this happens, startups will be able to raise up to $1 million in funding from non-accredited investors (read: regular people). This appears to accomplish two big things:
- It increases the total amount of money available to startups (theoretically should increase the number of startups that…start)
- It gives the common citizen the ability to invest a small amount in an early-stage company
There are a few clear problems that come with this Act.… Read More