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NEW YORK (
TheStreet) -- Today at a Joint Committee Hearing in Congress, legislators will be hearing from small business owners about the importance of implementation of the Jobs Act, the much publicized, and criticized (including from
) law passed by an overwhelming bipartisan majority this spring. Despite being written into law more than four months ago, many of the key provisions of the law have not yet come into force.
The most pressing issue is when the law will come into effect for the hundreds of thousands of small businesses seeking to raise capital from accredited investors (investors who make more than $200,000 a year as an individual, $300,000 per year as a couple or have $1,000,000 or more in net assets excluding their home). Currently, these businesses are prohibited from advertising a capital raise (called general solicitation).
The law instructs regulators to remove the prohibition against general solicitation, but also gives them leeway to define adequate rules to protect investors once this advertising is permitted. The rules were supposed to be in place more than two months ago, yet a final timetable has still not been announced.
Exactly when, and how, private companies can advertise for investors is important for all Americans -- whether they are investors, small business employers, consumers of products and services from local businesses across the country or simply care about job creation. Small and start-up businesses account for half of all private-sector employment in the U.S., and two out of three jobs created in the last 30 years. They are a critical driver of our national economy, and the future large employers of tomorrow.
Investors: For investors, non-institutional private investing is a $50 billion market that operates with incredible inefficiency. Without open communication, investors must spend time developing relationships and networking to gain access to "deal flow" that they may not otherwise ever find, let alone gain access to. Private equity and venture investments occupy an important place in a well-diversified portfolio for many of the largest investors in the country, but -- in part because of the lack of information -- these investments are largely beyond the reach of most investors (and are costly, with investors paying significant fees).