In proclaiming November as National Entrepreneurship Month, President Obama reaffirms this call to action:
As we work to secure America’s status as the best place on the planet to generate sweeping innovation, we must continue to make it easier for startup hotbeds to emerge across our Nation and for those underrepresented in entrepreneurship to contribute their individual ideas and talents to our collective success.
America is full of entrepreneurial success stories. Aurora Anaya-Cerda fulfilled her dream to open East Harlem’s first bookstore and community space. Emily Núñez started a social enterprise that helps employ veterans by repurposing military surplus fabric into stylish bags. Peter Platzer is helping young students run experiments on a fleet of tiny Earth-orbiting satellites.
What do these entrepreneurs have in common? They and many others all got off the ground thanks in part to crowdfunding – using an online platform to raise capital in small increments from many individuals. While startups and small businesses have increasingly engaged in donation-based crowdfunding in recent years, generally these entities could not offer a financial return to regular investors without triggering securities rules originally designed for large public companies.
Last week, the Securities and Exchange Commission (SEC) voted to approve a final rule implementing a key provision of the bipartisan Jumpstart Our Business Startups (JOBS) Act, which will, for the first time, create a national framework for securities-based crowdfunding to allow entrepreneurs to raise up to $1 million from regular investors annually through regulated online platforms.
As the President said when signing the JOBS Act, this provision is “a potential game changer” for American startups and small businesses. The Act promises to democratize investment so that more entrepreneurs across the country and in underserved communities will have greater access to capital. At the same time, important investor protections are built into the crowdfunding rules. All transactions must occur through SEC-regulated intermediaries, which will help ensure that companies make required disclosures and that regular investors abide by limits on how much capital they are able to put at risk.
Once this regulation is effective six months from now, the SEC’s initial rulemaking on all major provisions of the JOBS Act will be complete. SEC Chair Mary Jo White has pledged to continue to monitor the new regulatory frameworks being put in place to ensure that they lead to safe and efficient marketplaces, in which a greater diversity of entrepreneurs can access capital from well-informed investors.
The Obama Administration has taken many other actions to promote entrepreneurial opportunity for all Americans – by ensuring affordable healthcare, a free and open internet, troves of open data, rapid tech training, and more. This past summer, at the first-ever White House Demo Day, the President welcomed startup founders of many backgrounds and from many corners of our country to showcase their innovations, and announced major new commitments from investors, companies, universities, and cities to promote inclusive entrepreneurship.
Throughout November, and in recognition of National Entrepreneurs’ Day (November 17), we will highlight many more entrepreneurial success stories from across the country. Stay tuned!
Doug Rand is Assistant Director for Entrepreneurship at the White House Office of Science and Technology Policy