The Securities and Exchange Commission yesterday outlined its long-awaited rules to allow start-ups easier access to funding, a move expected to boost job creation by small business.
The proposed rules implement a provision of the JOBS Act signed by President Obama in April that lifted a "general solicitation" ban, which has so far kept entrepreneurs from publicly asking investors for money without registering securities with the SEC. The move may bring more support to "crowdfunding," which has grown in popularity among entrepreneurs trying to get projects off the ground. The JOBS act reasoned that by allowing small businesses, venture capital firms, private-equity funds and hedge funds to directly solicit more money, they will be able to create more jobs.
Current regulations have kept crowdfunding from really catching on because they require companies to register their securities if they want to publicly solicit money through, say, advertisements or over the Internet. CircleUp, for instance, helps match revenue-generating consumer-product, restaurant or retail start-ups with viable investors, but hasn't been able to allow for contributions from certain individual investors.
The SEC's proposed rules indicate that companies seeking investments must "take steps to ensure that this ability is not used to sell securities to those who are not qualified to participate in such offerings," SEC Chairman Mary Schapiro said in a statement. Only accredited investors with over $1 million in assets, or who generate more than $200,000 per year in income will be able to invest.
According to a study from the University of Pennsylvania published in July, 75% of projects funded by crowdfunding firm Kickstarter didn't finish on time. Some argue that statistics like these will make customers more hesitant to invest. The site doesn't track whether projects are actually successful after they have been funded, but encourages investors to be circumspect, and encourages fundraisers who miss deadlines to return money to investors.
Minor Details (WSJ)
Facebook has been given the go-ahead by the state of California to issue stock for its April acquisition of Instagram, the mobile photo-sharing app. Facebook's stock value has dropped to below $20 from its IPO price of $38 a share, meaning that Instagram, which initially cost Facebook a cool $1 billion, is really only worth around $750 million now.
Moving Up (NYT)
Budget-conscious tech start-ups tired of the lofty commercial rents in Manhattan's trendiest neighborhoods are increasingly taking up residence in Midtown, a land known more for its button-down shirts than the jean-and-sneaker crowd.
Caught Red-Handed (WSJ)
An ex- Motorola software engineer was sentenced to four years in prison for stealing the company's trade secrets and giving them to Sun Kaisens, a Chinese telecom company that she was working for in secret.
IT Farms (Herald Online)
A new report indicates that Wall Street firms are hiring IT folks from some of the top techie-producing universities. Schools like Carnegie Mellon, MIT and Rensselaer Polytechnic are the first places recruiters are shopping.
Sergey Brin, co-founder of Google, has been helping fund a real-estate investment firm charged with purchasing dreary storefronts in Los Altos, Calif., renovating them and finding new tenants, in an effort to revitalize the downtown neighborhood.
Quite a Display (AllThingsD)
AT&T is set to open a 10,000 square foot retail space on Chicago's Michigan Avenue. The store will feature fingerprint-activated cash registers, a car synced with the company's service and a demo of its forthcoming home security service, complete with a mock home.
Misunderstood (PC World)
If you have a bunch of lazy employees who don't seem to want to work with the complex technology that's used by your company, look a little closer. They might actually be innovating new, more efficient ways of getting the job done.
Bonjour, Generation Y! (Associated Press)
François Hollande, the new president of France, is so determined to lower the country's under-25 unemployment rate, he's offering government money to pay the salaries of young people hired next year.
Buzz Around the Office
Child's Play (BBC)
According to research, the sight of babies' faces makes people want to act nicer. That, says advertising agency Ogilvy & Mather, was the inspiration for spray-painting the faces of infants and toddlers on storefronts in a crime-ridden area of London.
List of the Day: How to Ruin an Interview
There are a lot of ways to mess up your chances of landing a job. Here are a couple:
1. Slouch in your seat.
2. Click your pen. Constantly.
3. Show signs of pessimism.