Entrepreneurship is everything in the US. It’s what sets us apart. Schoolchildren are raised on stories about inventors like Benjamin Franklin and Thomas Edison, and entrepreneurs like Andrew Carnegie and Henry Ford. Here in Silicon Valley, we tend to take it for granted that the entrepreneurial spirit literally fuels the economy.
It’s easy to forget the rest of the world isn’t like Silicon Valley.
We’re here in this booming hub where creative startups are everyday clients. We work with the world’s top VCs who fund our clients in the tens of millions. Of course this isn’t the case everywhere. In order to help small businesses thrive on a larger scale, we need to get creative and loosen up national business practices. The new Jumpstart Our Business Startups (JOBS) Act could be just the sort of help US startups need.
In signing the JOBS Act in the beginning of April, President Obama acknowledged the need for what he called “game changing” practices in the business world. An article in Mashable defined the JOBS Act as “a bipartisan bill which aims to make it easier for startups to grow, hire employees and contribute to the United States’ sluggish economic recovery.”
The bill classifies startups as “emerging growth companies,” and says companies under this description may now turn to online investors to raise their startup capital. The idea behind the JOBS Act is based on "crowd funding." Investments would come from online investors, and be implemented in a way similar to websites like Kickstarter or Indygogo, which allow users to raise money for creative projects via online donations.
However, the JOBS Act isn’t for everyone. There are many complexities and responsibilities inherent in taking on investors. As another Mashable article points out, the crowd funding feature of the bill will impact investors as well as startups because the law allows almost anyone to invest. Mashable points out that in the amended bill, the Senate gave the U.S. Securities and Exchange Commission 270 days to interpret and issue rules for the public. So, it may not be legal to make an investment through the JOBS Act until 2013.
In the meantime, it’s important for startups to hash out a communications plan for investors. You’re now answering to “many bosses” and they’re going to want to be over communicated to. How is the business executing on its plan? What is the customer adoption rate? Is the product delivering on its promise? Are partners happy? Are revenues growing?
I think it’s great that the newest generation of entrepreneurs will have access to an alternative to the traditional IPO, bank borrowing and VC investing. However, as with any new model, all parties should approach the JOBS Act well educated and with eyes wide open.
Joanna Kulesa is principal of Kulesa Faul, in San Mateo, CA. Kulesa Faul focuses on public relations, social media and communications strategies for enterprise software and consumer technologies companies.—www.kulesafaul.com