Looking at the new crowdfunders and the JOBS Act

Posted by | 27 April, 2012 | Business planning, Software & technology, Startup

Original post by John Peabody via reuters

The crowdsourcing site Kickstarter just turned three years old, and the New York Times has a niceprofile that explores how the company has evolved and how its changed the way entrepreneurs, artists, and anyone else with an idea can raise capital online.

Much as the introduction of cheap Web services lowered the barrier to entry for people seeking to create a start-up, and as offshore manufacturing gave entrepreneurs a chance to make products without having to build a factory, Kickstarter offers budding entrepreneurs a way to float ideas and see if there’s a market for them before they trade ownership of their company for money from venture capitalists.

Tapping into the wisdom of the crowd is nothing new. And now that Kickstarter has beaten the path, there are a few similar, and niche-focused, alternatives to Kickstarter. One interesting development to consider, though, when thinking about the online fundraising space, is the Jumpstart Our Business Startups Act, also known as the JOBS Act. As Talking Points Memoreports:

Kickstarter and other crowdfunding websites are also facing something of a watershed moment in the wake of passage of new bipartisan legislation, the JOBS Act, that would specifically allow for private startup companies to solicit investors with stock options offered online, something previously not allowed under Securities and Exchange Commission regulations.

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