JOBS Act is signed with the efforts of Desh Deshpande
Desh Deshpande was with President Obama at the White House Rose Garden for the Signing Ceremony of the JOBS Acts. Desh chaired a sub-committee for “Access to Capital” for Entrepreneurs and came up with a set of recommendations, which were incorporated into the JOBS Acts. Desh said, "It was heartening to see that the Senators and the Congressmen approved the bill with bi-partisan support. There was a lot of excitement about the progress. It was exciting to be in Washington and see how the political machine can make a positive difference."
Desh Deshpande is Co-Chair of the National Advisory Council on Innovation and Entrepreneurship (NACIE). This council was formed by President Obama in 2010 to study the legal and regulatory impediments to capital access and identify ways in which the Obama Administration could improve and accelerate access to capital for high-growth companies. Desh Deshpande is chairman of A123 Systems, Tejas Networks, and Sycamore Networks as well as Trustee of TiE Global and TiE Boston Charter member.
Excerpt from White House Press Release:
President Obama signed the Jumpstart Our Business Startups (JOBS) Act, a bipartisan bill that enacts many of the President’s proposals to encourage startups and support our nation’s small businesses.
The President believes that our small businesses and startups are driving the recovery and job creation. The JOBS Act will allow Main Street small businesses and high-growth enterprises to raise capital from investors more efficiently, allowing small and young firms across the country to grow and hire faster.
“America’s high-growth entrepreneurs and small businesses play a vital role in creating jobs and growing the economy,” said President Obama. “I’m pleased Congress took bipartisan action to pass this bill. These proposals will help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.”
In March of last year, the President directed his Administration to host a conference titled “Access to Capital: Fostering Growth and Innovation for Small Companies.” The conference brought together policymakers and key stakeholders whose ideas directly led to many of the proposals contained in the JOBS Act. A primary take-away from the conference was that capital from public and private investors helps entrepreneurs achieve their dreams and turn ideas into startups that create jobs and fuel sustainable economic growth.
Key Elements of the JOBS Act
- Allowing Small Businesses to Harness “Crowdfunding”: The Internet already has been a tool for fundraising from many thousands of donors. Subject to rulemaking by the U.S. Securities and Exchange Commission (SEC), startups and small businesses will be allowed to raise up to $1 million annually from many small-dollar investors through web-based platforms, democratizing access to capital. Because the Senate acted on a bipartisan amendment, the bill includes key investor protections the President called for, including a requirement that all crowdfunding must occur through platforms that are registered with a self-regulatory organization and regulated by the SEC. In addition, investors’ annual combined investments in crowdfunded securities will be limited based on an income and net worth test.
- Expanding “Mini Public Offerings”: Prior to this legislation, the existing “Regulation A” exemption from certain SEC requirements for small businesses seeking to raise less than $5 million in a public offering was seldom used. The JOBS Act will raise this threshold to $50 million, streamlining the process for smaller innovative companies to raise capital consistent with investor protections.
- Creating an “IPO On-Ramp”: The JOBS Act makes it easier for young, high-growth firms to go public by providing an incubator period for a new class of “Emerging Growth Companies.” During this period, qualifying companies will have time to reach compliance with certain public company disclosure and auditing requirements after their initial public offering (IPO). Any firm that goes public already has up to two years after its IPO to comply with certain Sarbanes-Oxley auditing requirements. The JOBS Act extends that period to a maximum of five years, or less if during the on-ramp period a company achieves $1 billion in gross revenue, $700 million in public float, or issues more than $1 billion in non-convertible debt in the previous three years.
Additional Initiatives to Promote Capital Access and Investor Protection
- Monitoring of JOBS Act Implementation: The President is directing the Treasury Department, Small Business Administration and Department of Justice to closely monitor the implementation of this legislation to ensure that it is achieving its goals of enhancing access capital while maintaining appropriate investor protections. These agencies, consulting closely with the SEC and key non-governmental stakeholders, will report their findings to the President on a biannual basis, and will include recommendations for additional necessary steps to ensure that the legislation achieves its goals.
Crowdfunding Platforms Commit to Investor Protections: In a letter to President Obama, a consortium of crowdfunding companies are committing to work with the SEC to develop appropriate regulation of the industry, as required by the JOBS Act. Members of this leadership group are committing to establish core investor protections, including an enforceable code of conduct for crowdfunding platforms, standardized methods to ensure that investors do not exceed statutory limits, thorough vetting of companies raising funds through crowdfunding, and an industry standard “Investors’ Bill of Rights.”
For the full press release from the White House, click here.