JOBS Act Becomes Law

I was honored to represent the startup community across America this afternoon as a guest of President Obama in the White House Rose Garden as he signed JOBS Act into law. This bi-partisan bill will do great things for our community; through increased ability for companies to go public, raise money through crowdfunding or scale their products and businesses into the marketplace with greater ease.

The President, along with House Republican Leader Eric Cantor who introduced the bill in February, Sens. Jeff Merkley and Scott Brown who worked tirelessly on the crowdfunding issues, and many others in both parties and both Houses of Congress are to be thanked for making sure this legislation passed with the support and speed that it did. With Engine, I look forward to helping many new startups benefit from this law, and continuing to work with the Congress and the President to pass further legislation aimed at helping startups continue to drive the Engine of the American economy.

JOBS Act Passed, With Additional Investor Protections

Minutes ago, startup financing bill JOBS Act passed the Senate 73-26, with an amendment to further protect investors.

The bill, which we discussed here, seeks to ease the way for startups to access investment capital through provisions that address the transition between being a privately held company and a publicly traded one — eliminating the 500 shareholder cap, allowing general solicitation and crowdfunding, creating an IPO onramp — and provides startups with more financial pathways to success.

Concerns that greater access to investments — especially through the crowdfunding provision in the bill — prompted fears from many quarters that investors would be opened up to fraud, or worse, that a “free-for-all” environment for investing in startups would create a reiteration of the dot-com bubble burst. An amendment offered by Sens. Merkley (D-OR) and Brown (R-MA) passed along with the bill which addresses these concerns.

The amendment requires companies raising up to $1 million to be transparent with potential investors about certain financial information, and prevents investors with an income lower than $100,000 from investing more than 5% of their annual income.

JOBS Act always called for “reasonable protection” of investors against fraud, and now the Merkley/Brown amendment further distinguishes what safeguards will be extended on behalf of investors. Another amendment offered by Sen. Reed (D-RI) that changed the definition of the “emerging growth companies” that JOBS affects was rejected.

The Merkley/Brown amendment means the bill will go back to the House before being signed into law by the President. We’ll be tracking.

Policy Update: JOBS & Startup

Last night, we sent out the following email to our friends and members to inform them of current legislation aimed at easing the way for startups. We want to share the update with you now, as a resource for understanding key provisions of JOBS Act and Startup Act, and to hear your thoughts on these bills. If you want to sign up for email updates like this in the future, subscribe to our mailing list here.

Dear Friend,

Engine has been tracking recent legislative efforts to foster entrepreneurship and small business. Today, the Senate begins debate on the JOBS Act, which passed the House last week. Startup Act is next on the legislative agenda and responds to a number of key startup needs.

JOBS Act

The JOBS Act is a legislative package designed to lower barriers to entry for entrepreneurs by reducing limitations on fundraising and decreasing crippling bureaucratic overhead currently required by existing regulatory legislation. While there’s good and bad contained within it, it is heartening to see Congress prioritizing legislative issues that affect startups. You can read about the provisions we like in the JOBS Act.

• Ease of raising capital through crowdfunding and ease SEC regulations on offerings from $5 million to $50 million, making it easier for startups to raise capital.
• Create IPO onramp for class of emerging growth companies with annual revenue of less than $1 Billion.
• Emerging growth companies are subject to fewer SEC regulations when filing for IPO

But JOBS is just the beginning.

Startup Act

It’s time to move forward on Startup Act. We have only a few weeks left to effect change in Congress this session, and Startup Act represents another clear step toward passing legislation that benefits entrepreneurs and creates jobs -- this year. We also took a look at some of the key provisions in Startup, here’s a quick summary, with more detail available on our blog.

• Promote job growth by making the capital gains tax exemption for startups permanent.
• Reform the process by which qualified STEM graduates and foreign born entrepreneurs are able to stay and start businesses in the United States
• Spur innovation by providing incentives for universities to turn federally funded research into tangible jobs and businesses.

To take action on JOBS Act, sign the petition at AngelList here. And stay tuned, in the coming weeks we’ll ask you to take further action in support of Startup Act.

-The Engine Team

IPO On-Ramp For Emerging Growth Companies

Bill of the week: S.1933, or the Reopening American Capital Markets to Emerging Growth Companies Act of 2011. You might also know it as the Sub $1 billion Revenues IPO Act -- a shortened working title conferred by Fred Wilson at A VC, who championed the bill last Friday.

The bill amends the Securities Act of 1933 and Sarbanes Oxley to ease the time and financial burden of regulatory compliance for small companies going public. Specifically, the legislation would give “emerging growth companies” -- companies with revenues of less than $1 billion -- five years to comply with SEC regulations for an IPO. The temporary exemptions would allow smaller companies an eased path to IPO, while maintaining compliance obligations that protect investors. Eased regulations for IPO would give smaller companies greater access to markets and capital at a critical stage in their growth.

This bill corresponds to part of the Obama Administration’s Startup America Legislative Agenda, a detailed list of priorities released a month ago to spur job creation by addressing the needs of start-ups. We wrote about the agenda in detail here.

You probably already know how vital start-ups are to job growth -- Kauffman research shows that start-ups are responsible for nearly all net new job growth in the country since 1977. But in case you need a refresher, this video is short, sweet, and explains the issues well. Bottom line? Election year or no, stimulating job growth and the economy is a non-partisan issue.This is an important bill, and one that we want to see passed sooner rather than later.