SEC Making it Easier for Smaller Startups to Get Common Folk Funding

SEC Making it Easier for Smaller Startups to Get Common Folk FundingGone are the days when investing in startups was the seeming birthright of an elite breed of heavy-hitting financial titans and big league investors.

Last week, the Securities and Exchange Commission (SEC) rolled out new rules that implement Title IV of the JOBS Act.

The rules “facilitate smaller companies’ access to capital.  The new rules provide investors with more investment choices.”

Here’s how it works:

The new rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities.  The rules are mandated by Title IV of the Jumpstart Our Business Startups (JOBS) Act.

The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements.

“These new rules provide an effective, workable path to raising capital that also provides strong investor protections,” says SEC Chair Mary Jo White.  “It is important for the Commission to continue to look for ways that our rules can facilitate capital-raising by smaller companies.”

Chris Tyrrell, chief executive of OfferBoard Group, writes in TechCrunch that these changes represent “welcome news to small and medium sized enterprises striving to raise capital, but which lack access to high net worth investors or institutions. Reg A will open many more offerings in growing companies to everyone, which will increase capital formation and grow jobs and the economy.”

To read the complete announcement from the SEC, click here.