President Barack Obama is hoping to increase employment in small business and newly established companies after signing a recently passed piece of legislation.
The new JOBS Act – the Jumpstart Our Business Startup Act – seeks to make it easier for small firms to raise capital by ending the complex process of gaining new investors. In a column for CNN, Amy M. Wilkinson, a senior fellow at the Harvard Kennedy School of Government , said that provisions in the new law would allow entrepreneurs to leverage the social networks and other online platforms to raise funds.
"The bill's 'crowdfunding' provision is getting the most attention," she writes. "It allows entrepreneurs to raise small amounts of capital from large pools of individual investors. The Internet provides a tool for private citizens to form new marketplaces as social networks evolve to become more than just networks of friends."
The legislation will also make it easier for firms to stay private if the leadership decides to do so. Under the old law, if a company had more than 500 investors it would have to go public. That number is doubled to a 1,000 investor limit under the IPO flexibility.