Jumpstart Our Business Startups (JOBS) Act
The Jumpstart Our Business Startups Act of 2012 (JOBS Act) modernized US securities law to facilitate capital formation for smaller companies by creating new securities registration exemptions, expanding crowdfunding, easing IPO burdens for emerging growth companies, and relaxing restrictions on general solicitation in private offerings.
The JOBS Act was signed into law in April 2012 and addressed a long-standing criticism that US securities regulations — designed in an era of paper-based markets and large institutional participation — created disproportionate barriers for small and growing companies seeking to raise capital. The Act contained several distinct titles addressing different aspects of capital formation.
Title I created the Emerging Growth Company (EGC) category for companies with annual gross revenues below $1.07 billion (adjusted periodically) that are conducting an IPO. EGCs benefit from a scaled disclosure framework: they can submit IPO filings confidentially before going public, are exempt from the requirement to have an auditor attestation on internal controls for up to five years, can provide only two years of audited financial statements rather than three, and are exempt from certain executive compensation disclosure requirements. The EGC designation significantly reduced the cost and complexity of going public for smaller companies.
Title II directed the SEC to eliminate the prohibition on general solicitation in Rule 506 private placements, provided that sales are limited to verified accredited investors. This change, effective in 2013 as Rule 506(c), allowed issuers to advertise private offerings broadly — through websites, social media, and public presentations — rather than being restricted to pre-existing relationships. It fundamentally changed how startups and private funds can market their offerings.
Title III established equity crowdfunding, allowing non-accredited retail investors to participate in startup capital raises through SEC-registered crowdfunding portals, subject to investment limits based on annual income and net worth. The rules (Regulation Crowdfunding) took effect in 2016 and were expanded in 2021. Title IV created Regulation A+, a scaled-down public offering process that allows smaller companies to raise up to $75 million annually under a streamlined review process, creating what is sometimes called a mini-IPO path.
The JOBS Act reshaped the US capital formation landscape, contributing to a sustained period of growth in private markets and altering the traditional trajectory from startup funding to public markets.