JOBS Act passes House, en route to Obama for signing
The landscape for technology startups is about to change dramatically.
New legislation governing the rules for Silicon Valley entrepreneurs and investors is now headed to President Barack Obama, who is expected to sign the bill into law.
The JOBS Act passed the U.S. House of Representatives today by a 380-41 vote. All throughout the debate over the proposal, there has been bipartisan support that has helped to overcome warnings that less rigorous government oversight might inadvertently open the door to more investment scams.
Among other things, the legislation is designed to help startups avoid a lot of regulatory red tape when they try to raise capital. The JOBS acronym comes from the phrase "jumpstart our business startups."
Last week, the Senate passed the bill by a 73-26 vote. The final version of the proposal, which retains several smaller bills that were submitted to help startups, includes a provision allowing smaller companies to go public sooner. Another change: companies will be able to use "crowdfunding" to accept investments from smaller investors over the Internet. Rafe Needleman lays out the key provisions of the JOBS Act here.
And here's another angle on what we can likely look forward to, according to my colleague Paul Sloan: "After the JOBS Act becomes law, expect an onslaught of hype from those trying to get attention, especially now that startup lawyers will no longer advise their clients against blatant promotion of their fund-raising needs."
On one level, the new law will lead to some basic changes and ease concerns among startups and their proponents. Accelerator programs hosting demo days and events like Jason Calcanis's Launch can carry on without concern of an SEC crackdown. Sites like AngelList will be able to let companies post financial documents or, for that matter, even publicly say on the site that they are seeking investors, something that AngelList currently forbids.
Similarly, any startup will be able to talk about its fundraising efforts on its Web site, also something that doesn't happen now. Founders also can take to YouTube, Facebook, LinkedIn, Twitter and elsewhere try to attract attention.
And the downside, in Sloan's estimation?
Unsuspecting people will also surely lose money. But that's more likely to happen not because of fraud but because startups usually fail and thus make for super risky investments.
On Thursday, CNET will host, and broadcast live, a Community Series discussion about startup funding, featuring three longtime Valley players--Dave McClure of 500 Startups, Naval Ravikant of AngelList and George Zachary of Charles River partners. It'll take place at our main offices in San Francisco; sign up and come on by.