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Title III of the JOBS Act Is Now Underway

On May 16th, Title III of the Jumpstart Our Business Startup (JOBS) Act came into law, four years after officially being passed. According to Ryan Feit, CEO of equity crowdfunding platform Seedinvest, “[i]n a nutshell this means that early stage startups and small businesses will be able to raise up to $1 million through investments as low $100 per person.”

At theIRapp and APPrise Mobile, we view this as a positive step as it allows small businesses to equity crowdfund from non-accredited investors. Of course, when dealing with smaller businesses and non-accredited investors, both parties need to be aware of the risks associated with this type of investment.

This is where communications comes into play.  From the issuer’s perspective, transparency will undoubtedly differentiate the many companies that will now be out there trying to get moms and pops to write them checks.  The company that provides the most information has the ability to convince investors as to why their business is better than the next and has the potential to grow and generate significant returns on one’s equity investment.  From the investor’s perspective, having access to information not frequently provided by smaller, private companies (e.g. an investor presentation, fact sheet, accountant compiled or audited financial statements, etc.) will go a long way towards not only building confidence in a company’s management team, but also understanding the investment opportunity at hand.

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