As you’ve probably heard, President Obama signed the JOBS Act on Thursday. So startup companies will soon have some new ways to raise money, and if they go public, have an easier (read: less expensive) means of complying with SEC Rules and Regulations. We think this is a pretty good deal for all of us tech companies out there. After all, even President Obama said that, “this is a country that’s always been on the cutting edge—and the reason is that America’s always had the most daring entrepreneurs.” We agree (and not just because we are a bunch of them).
We also think this could have some interesting implications for lawyers who represent these companies. Their seed financing deals could get more complicated and hard to manage. But here’s the best part – Brightleaf can help.
Under the JOBS Act, startups can raise up to 1 million dollars via crowdfunding. That means the company can go out to an SEC-approved website where smaller investors can pledge small amounts of money to the company – say $5,000 or $10,000. This could result in companies raising money from a much larger group of people than they ordinarily would. For a typical seed round, companies may raise money from a group of 10-25 individuals, or even from a single fund where the investors have already pooled their money. But with the JOBS Act, startups could end up with dozens of investors.
What does this mean for lawyers? A lot of papers for people to sign and names to keep track of. But if the lawyer could enter these names into a software that would prepare the appropriate investment document for each of these people, that might save some time, right? Indeed. And this is why Brightleaf has what we call One-To-Many technology. To help you draft those documents that need to go to many people in slightly different forms, like employment agreements, option grants, and yes, angel investor subscription agreements.
We won’t say we knew the JOBS Act was going to happen, but we’re prepared to help lawyers deal with it anyway. Give us a call to find out how.