The Jumpstart Our Business Startups Act (the JOBS Act), enacted in April this year, makes a variety of significant changes to securities laws, some of which relate to early-stage entrepreneurs, startup companies and venture capitalists concerned about fund raising with respect to their portfolio companies.
In this article, I address provisions of the JOBS Act most applicable to startup companies and venture capitalists that fund them. In this piece, I will not be covering other changes in the Act such as broker/dealer regulations, “Reg A+”, or the changes to research reporting and analyst rules.
IPO On-Ramp
The JOBS Act contains various changes to the requirements for a company listing its shares in its initial public offering, referred to as the IPO “on-ramp” provisions. These changes should assist emerging companies as they consider an IPO as a strategy to raise funds for growth while creating liquidity for their venture capital and other investors. The key IPO on-ramp provisions, which went into effect immediately in April, are identified below.Continue Reading JOBS Act: What Matters Most for Startups and VCs