Originally posted in November 2013:
The JOBS Act reminds me of the old joke about the elephant and the blind men. An elephant looks very different depending upon which part you’re touching. There’s lots of hype around the concept of crowd equity for sure – almost breathless at times. This week’s announcement that the SEC is moving forward with rules to effect the intent of the Act – to allow unaccredited investors (i.e.., not wealthy people) to invest in startups through on line exchanges – was no exception. Make no mistake, allowing people who are not well off to invest up to $5,000 in the stock of a small privately held company is a big change – it undermines 80+ years of securities laws based upon a simple principle: in the absence of a test for financial sophistication, having sufficient assets to absorb an investment loss is the best protection for investors.
But, is it a big deal for startups and investors? Sadly, as a practical matter, there are aspects of this new regime that will … Read the original post from November 2013.