From the Rose Garden: Report on the President's Signing of the JOBS ActBy http://profile.typepad.com/1237764140s22740 // April 6, 2012 in JOBS Act
Fellow Seattlite Dan Rosen, Alliance of Angels Chair and ACA Public Policy Committee Chair, and I attended, representing the Angel Capital Association (massive thanks to ACA Executive Director Marianne Hudson for sponsoring me). It was a gorgeous, sunny, warm Spring day. Everyone was thrilled to be there. I was a bit surprised at how even the politicians (with the possible exception of House Financial Services Committee Chair Spencer Bachus) were thrilled to be there.
To my right (and pictured standing) sat ex-Seattlite Matt Chasen, Founder & CEO of uShip, a 100+ person emerging company based in Austin and backed by Benchmark Capital. To him, the JOBS Act is definitely about facilitating uShip's path to IPO (the so-called "IPO on-ramp" provisions of the new law). I asked him what the IPO does for him: access to public capital markets, or liquidity? Liquidity for investors and employees, he said. (Supposition on my part: he probably has no problem raising private capital. The exit is the sticky bit.)
Another Seattlite, Tom Alberg of the VC firm Madrona Venture Group, was there. Dan and I chatted with him in the Rose Garden right after the ceremony. Tom thinks that some enterprising mid-market investment bankers might do good for everyone by trying to make the reformed Reg A - another product of the JOBS Act - a viable way to raise funds once again. By lifting the Reg A limit from $5 million to $50 million, arguably Reg A creates a space for emerging companies to raise meaningful growth capital short of the extraordinary effort and expense associated with an IPO and its aftermath.
Also in attendance were the extraordinary leaders from the Crowdfunding Leadership Group. I'm not going to say to much in today's post about the crowdfunding exemption, the most unexpected initiative of the JOBS Act, because I went to an after-party of crowdfunders and have a whole other post to write just about what took place there. Many thanks to Nick Tommarello and Mike Norman of Wefunder for inviting me to this after-party, which turned out to be the birthing of an SRO for the crowdfunding industry. (Mike Norman, along with Dan Sullivan, both of Wefunder, are pictured here with Senator Scott Brown.)
For reasons that may be perfectly obvious to everyone except me, VCs and crowdfunders don't talk to each other. But the President seems to want to bring them together. I love these two paragraphs from his address to us (the first paragraph is for VCs and their venture-backed founders, like Matt Chasen; the second is for crowdfunders):
"Here’s what’s going to happen because of this bill. For business owners who want to take their companies to the next level, this bill will make it easier for you to go public. And that’s a big deal because going public is a major step towards expanding and hiring more workers. It’s a big deal for investors as well, because public companies operate with greater oversight and greater transparency.
"And for start-ups and small businesses, this bill is a potential game changer. Right now, you can only turn to a limited group of investors -- including banks and wealthy individuals -- to get funding. Laws that are nearly eight decades old make it impossible for others to invest. But a lot has changed in 80 years, and it’s time our laws did as well. Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors -- namely, the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in."
Notice, however, that the term "angel" has not been presidentially recognized (yet): those of us who (yet) work mostly in the angel capital space are "wealthy individuals" (I'll have to tell my Mom that).
Speaking of angels: Dan Rosen (that's Dan just above, center frame, yellow tie) and I met and compared notes with Naval Ravikant and Kevin Laws of AngelList, too, in the Rose Garden. Angels in some ways occupy a space between the VCs and the crowdfunders, and, while it would be a stretch to say that all angels are comfortable with equity crowdfunding, at least angels and crowdfunders are willing to talk.
Dan Sullivan and I were chatting after walking out of the White House compound, and shared how struck we were with the phrase the President used to describe the crowdfunders: they are "the American people." Wefunder Dan told me he wished the crowdfunding movement had come up with that phrase back at the beginning! (I also think it is significant that the Whilte House press release about the signing links to an April 5 letter from the Crowdfunding Leadership Group.)
The politics of all of this are fascinating. The next chair over to my left sat Michael Ference, House Majority Leader Eric Cantor's Director for Strategic Development. I asked him about how the bill came together, and what the House did to prod the Senate to act. Lots of reaching out on the House side to pull the bills together in a package, he said; but on the Senate side, that happened on its own, he said, or at least without a lot of negotiating with the House leadership.
After the President left the Rose Garden, I went to the stage and introduced myself to Representative Patrick McHenry. I complimented him on the angel platform/incubator amendment (technically, a safe harbor from federal broke-dealer regulation) he successfully introduced, with kind words on the House floor from Representative Barney Frank. It occurs to me now that I didn't mention his crowdfunding exemption, for which McHenry is justly celebrated and famous. Probably because I get stuck in weeds sometimes. Once the Senate dropped McHenry's crowdfunding bill for Merkley's, I just couldn't stop seeing what got lost. Still catching up there.
Note to Mom: you can see me in the audience at about the 2:47 minute mark. (Thanks to Doug Cornelius for that heads up.)