Yes They Can: Crowd-Funding Bill Signed into Law

Jeff Bussgang (l) and Tim Rowe at the signing of the JOBS Act, April 5 2012

Alliance leaders Jeff Bussgang (l) and Tim Rowe were among those invited to the White House for the signing of the JOBS Act.

Last Thursday, President Obama signed the Jumpstart Our Business Startups (JOBS) Act into law. Congress worked out a compromise on some thorny issues and now startup companies and small businesses nationwide will have access to a new source of capital through crowd-funding. We’ve blogged extensively about the benefits of this new funding mechanism and some of the risks as well. The biggest story here is probably not the content of the legislation, but the example we now have of the business community, both parties in Congress and the President working together successfully. The big stories to come should be about job growth and also effective government regulation and oversight that protects investors.

Alliance members Jeff Bussgang and Tim Rowe have been high profile advocates for the bill and were on hand to witness the signing of the bill at the White House. Tim said of the event: “It was like a movie, walking into the East Wing of the White House, and then through a series of gardens and garden paths to the Rose Garden.  It was a magical moment, with an assemblage of fans of entrepreneurship, and the President, getting together and talking concretely about how we are going to address more of the problems facing the world through innovation.  A once in a lifetime moment.” 

This victory may seem small but the Alliance was glad to be a part of getting the job done. Can government and business work together successfully to create shared value for the public? Yes they can. 

Read Jeff Bussgang’s comments on the bill’s signing at his blog, here, and read Tim’s comments on the bill in the Huffington Post and in Xconomy.


  1. As an entrepreneur who has raised money for several ventures i am a tad skeptical that this legislation will have a big impact. But what I’m really concerned about is that the boiler room bucket shops will start up again to sell more sham IPOs to naive individual investors who should know better, but don’t. And its not as if we have an abundance of excess trust equity for the business sector in general or financial sector in particular.

    It is assuredly only a good think that crowd-funding is happening but realistically the amounts raised are hardly enough to get a business off the ground. How far can you go on $100k? At the end of the day what we need are good ideas, committed entrepreneurs, and deep pocketed investors willing to back them.

    Net/net, I think this legislation has been a bit over-hyped primarily because its the first legislation in a long time that had semi “bi-partisan” support and everybody loves entrepreneurs these days. Whether it will deliver the goods, or worse give us some headlines 2 to 3 years down the road we’d rather not see, is a open question. Expectations sure seem high.

    • Jibran Malek says:

      Great insight, Mr. Carson!

      Your concerns regarding crowd-funding are very real. As the law is implemented, it is critical that protections are put in place to properly protect investors.

      However, it is important not to under-estimate the potential impact this legislation could have. Having worked in the gaming industry for a few years, I am inclined to think that this legislation is a huge boon to innovation and great ideas.

      Take the recent success Double Fine Productions has had on crowd-funding platform Kickstarter with their currently untitled “point and click adventure game”. ( Many major video game publishers consider point and click adventure games to be a relic in the industry and are incredibly hesitant to invest in games that occupy that genre, mainly because common consensus is that point and click games appeal to such a niche audience. Having recognized this, Double Fine founder Tim Schafer hopped onto Kickstarter to start a grassroots campaign to raise funds to independently produce his game, free from industry pressure. In order to cover productions costs, Double Fine Productions projected a goal of $400,000 and asked for contributors to pledge a minimum of $15. In just over 8 hours, they reached and even surpassed their goal, with $15 donations numbering at 47,946 backers. With just the $15 backers, Schafer raised $719,190, far exceeding their goal. This resounding success using Kickstarter demonstrates how much power individuals can have on entrepreneurship.

      Another example of success comes from Alliance member, Alex Rigopulos, who started Harmonix, the original maker of Guitar Hero and now the incredibly successful Rock Band franchise, with $100,000 raised from friends and family ( Harmonix, initially a small company funded by capital from a local network has now revolutionized the industry for the better.

      These successes with crowd-funding gives me faith that it can be replicated across other industries and that this legislation could represent a new era in entrepreneurship.

    • Tim Rowe says:


      You mention concern with fraud, and also concern that $1M is not enough for many startups.

      On the fraud side, I had the same concerns, and did some research before I decided to support this legislation. What I found is that in the US and UK instances where crowd-funding-like activity is already taking place (AngelList,, CrowdCube, and Funding Circle) they are all experiencing… (drum beat) 0% fraud. Some of these places are doing lots of transactions with lots of money, and have done it for years. We can speculate why things have changed over the past century, but the empirical evidence is that they have changed.

      As to the amounts of money you can raise, most of us observing this believe that crowd-funding will service local businesses for which $1M is really a lot. New catering businesses, small construction firms, etc. This will be a platform for friends, family, and neighbors to help each other. In the tech startup world, this may augment angel financing. It won’t replace VC financing if you need millions, but it could be a popular way to get to the staring line with VCs.


  2. As an entrepreneur in the process of founding a start-up that may not be an organic match with traditional venture capital interests, I may benefit from the JOBS Act. At this point, I believe that entrepreneurs have a responsibility to protect this privilege by promoting a sense of honor within the community in how we use this new opportunity. The absence of fraud on AngelList is the result of the Naval Ravikant’s attention to creating a responsible community structure. The checks and balances are key and seem to reflect the values of AngelList’s leadership and community.

    I am actually more concerned about making sure that my grandmother understands the difference between public stock investments – which she expects to grow over time in spite of occasional losses – verses the extremely high risk related to very early stage investments. If the law’s implementation requires disclosure of the high risk ratio, including specific, prominent, clear language explaining that most start-ups fail, we will be off to a good start. I expect that the Suzy Orman’s of the world can help “keep us honest” in the realm of popular investment culture as well as they have warned us about the perils of credit cards. There are qualifying and maximum investment limits for investors under the JOBS Act, so the rest of the responsibility is rightly with investors to decide what they can afford to risk.

    Kudos to the whole team for getting Congress to pass a bipartisan bill at this moment in time. There is nothing small about that!