Monday, April 02, 2012

JOBS Act Update

Well, the Jummpstart Our Business Startup (JOBS) Act (Don't ya just love the clever name???) has passed both the House and Senate and Obama has said he will sign it.

One of the most important provisions for entrepreneurs is that it makes crowdfunding legal. This can make it far easier for startups to raise money.

However, I want to reiterate a point I made in an earlier post, and that is this: Just because you can raise money through crowdfunding does not mean you should raise money through crowdfunding. If you are sure that you can raise the entire amount that you will need through this method, then maybe (just maybe) you should consider it, despite the drawbacks. If you will need to later approach sophisticated investors for large amounts of capital, having a bunch of small crowdfunding owners could be like having an anchor tied to you.

Be sure you understand all aspects of raising investment capital before you make the crowdfunding leap!