JOBS Act : How will it Benefit the Crowdfunding Industry?

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jobsThe countdown for title II of “The JOBS Act” comes to an end. President Obama and Congress passed the Jumpstart Our Business Startups (JOBS) Act in April 2012.This law is designed to encourage small business and startup who want to raise funds using crowdfunding technology and allowing for more capital investment from private citizens.Prior to the JOBS Act, however, crowdfunding had only limited usefulness for facilitating investments in smaller companies.

Let’s explore some of the effects of JOBS Act on crowdfunding Industry

In response to the JOBS Act of 2012, which loosened the rules which contains  MAIN PROVISIONS:-

    • Removes the ban on general solicitation:– Allows investors to access more deal flow and entrepreneurs can easily reach more investors.
    • Removes the Accredited Investors Requirement:- Allows anyone in age of 18 to invest in private companies.
    • More Investors Can Take Part :- Small investors have greater access to private placements of equity for the first time. Previously, investment in non-private startup companies was limited to small groups.JOBS removes those limits.
    • An increasing number of entrepreneurs and businesses are benefitting from Title II crowdfunding.
    • The potential investor pool for private offerings prior to JOBS was limited to wealthy investors with a minimum net worth of $1 million. JOBS, however, allows virtually anyone with a positive net worth to invest capital through a private placement.

At Past before JOBS Act was passed258k Active Accredited investors
After JOBS Act Passed(accredited investor restriction removed) – Estimate 233.7MM Active Accredited investors.

While many entrepreneurs and members of the crowdfunding community await final regulations governing Title III of the JOBS Act, which allows non-accredited investors to participate in crowd investing.

Finally,
With this benefits of JOBS Act on crowdfunding Industry, It is forecasted that,till the end of 2025 crowdfunding platforms will expected to raise 96 billion dollars. By the announcement of this law, the demand of crowdfunding websites will grow rapidly.

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