In one of the most notable policy shifts in the startup world in years, the SEC vote to lift the ban on general solicitation in the JOBS Act means that startups can now publicly market their fundraising intentions. Prior to this decision, the antiquated notion that startups must solicit support in a vacuum has influenced the entire culture around starting a business and finding the resources needed.
Lifting the ban is a crucial step in the right direction in changing that culture, and as with anything, there will be a few inevitable challenges that emerge. However, I believe that the benefits will greatly outweigh those challenges, and we can celebrate that this decision reflects a response to the greater need for better support for startups as well as a growing appreciation for the role that new firms have in economic growth. Yet, bridging the gap between the grassroots, scrappy approach of many early-stage startups and the more top-down, process-driven realm of government has long been a challenge for both groups, but it is one that I believe we’re going to see change dramatically in the coming years. Ultimately, we should remember that tangible shifts in government are always an indication of changing perspectives and demand. In this case, we could be witnessing the laying of a groundwork for more critical decisions in our nation-wide government that will better support entrepreneurs.
One thing I’m personally grateful for is that we’re actively reducing the legitimacy of the most common challenge (and too often, excuse) given by potential entrepreneurs: access to capital. In making the acquisition of funds a more practical and simple process for startups, early-stage startups in particular will have more room to focus on their vision — and as a by product of that, they should be able to find the best possible investors that most align with that vision.
Through NEXT and especially Startup Weekend, we’ve seen many new founders put too much emphasis on funding too early. Hopefully, the lifting of this ban will also ensure that founders can turn to other critical factors on their entrepreneurial journey — such as team cohesion and function. The lifting of the ban can only help in the gradual shift away from the “support in a vacuum” culture and allow for less limitations around innovation and sacrifices made for the sake of funding.
If you’re a founder navigating the white waters of early-stage entrepreneurship, the lifting of this ban will certainly impact you, but entrepreneurs should remember that the new measure comes with some considerations that every founder should reflect on first. For a concise and accessible resource in understanding the implications of this shift, check out this recent infographic from Fundable.