The Barack Obama administration, along with his congress, created the Jobs Act to reinvigorate small business growth. The Jobs Act stands for “Jump Starting Our Business Startups”. This piece of legislature in my opinion is the single most important piece of legislature in President Barack Obama’s presidency. It is also the least discussed. At a high level it gives small businesses the ability to crowdfund from both accredited and non accredited investors. Accredited investors are investors that have a networth above 1 million dollars or annual income of 200,000 single or 300,000 jointly. Non accredited investors is everyone else who does not meet the qualifications of an accredited investor.
Why Is the Jobs Act So Important?
Small Businesses are the fuel of the American economy. Small businesses create, almost 50 percent of the private sector jobs in the US. There is a direct correlation between the US economy and the success of small businesses. I believe the Jobs Act is so important. It will be the longest lasting piece of legislature of Barack Obama’s presidency. This article describes why the Jobs Act is so important.
Jobs Act allows for Startup Small Businesses to Raise Capital from the Crowd
The Jobs Act allows small businesses that are in the startup phase to raise capital directly from the people. This is known as crowdfunding. This is a means of raising funds by small businesses that didn’t exist before.
Job Act Allows Unaccredited Investors to Invest in Startup Small Businesses
The Jobs Act allows people, both accredited and non accredited investors to become equity investors in small businesses. Before the Jobs Act crowdfunding existed with sites like Kickstarter but these crowdfunding sites never allowed for people to become equity shareholders, partners, or lenders. Kickstarter, as an example, allows for people to invest in ideas or products in exchange for perks like hats, t-shirts, product discounts, and other freebies.
The Jobs Act is the first time unaccredited investors can invest in small businesses. Previously, accredited investors was only allowed to invest in small businesses. Now unaccredited investors are able to take an equity stake in small businesses. Allowing unaccredited investors to invest in small businesses is huge in closing the widening of income equality that has occurred for the last 40 years. In some cases, unaccredited investors can take equity stakes for as little as $100.
Jobs Act as a Job Creator
One of the main benefits of the Jobs Act is that it allows small business startups to get the much-needed resources to create jobs. Unemployment is at a low in 2018 and it’s related to initiatives like the Jobs Act that allows small businesses access to capital.
The Jobs Act Helps With Lowering Income Inequality
Income inequality is basically the idea that the rich keep getting richer. In the US income inequality has been consistently going higher for around the last 40 years. Income inequality basically started growing excessively with President Ronald Reagan in the 1980s and has gone higher for the last 40 years. Before the Jobs Act only accredited investors were allowed to invest in startups. Imagine being able to invest in Facebook before it went Public. Early Facebook investors made a lot of money before it was made available to the Public. Previous to the Jobs Act this type of investment was only available to those who were already wealthy. Now everyday investors can become mini Peter Thiel’s. The Jobs Act allows non accredited investors to get an early piece of the pie and assists in leveling the playing field. Giving early access to a class of investment that was before only accessible by the wealthy, directly assists with lowering income inequality.
My Investment History with the Jobs Act
I started investing in Jobs Act Small Businesses in 2016. I had followed the Jobs Act as it made its way through Congress and SEC review. It was officially signed into law on April 5th, 2012. It took a long time between when the Jobs Act was signed and when non-accredited investors were allowed to invest in startups. Throughout that gap in time I continued to work on increasing my Networth through traditional means like investing in public companies. May 16, 2016 was the first time that non-accredited investors was able to invest in Small Businesses via the Jobs Act. In 2016, I was not yet part of the black 2 percent and therefore invested as a non-accredited investor. I invested in my first startup in 2016 of that year. I have since invested in several Jobs Act companies.
Jobs Act as an Alternative Investments
Alternative investments are an investment class that’s not conventional like stocks or bonds. Most Alternative investments previous to the Jobs Act was only accessible to the wealthy. Jobs Act made it such that certain alternative investment are now accessible by everyone. Prior to 2016, I had zero exposure to Alternative Investments. As of 2018, I now have about 4 percent of my Networth in Alternative Investments. I hope to increase my exposure to alternative investments to 10 percent of my Networth over the next few years. My preferred platform for investing in Jobs Act Companies is a company called “Wefunder“. Wefunder has been at the forefront of the Jobs Act. Wefunder helped pass the Jobs Act and was invited by Congress to watch Obama’s sign it into law.
Below is my current percentage allocation of Alternative Investments.
|Jobs Act Companies||96 percent|
|Non Jobs Act Companies (available to accredited investors)||0 percent|
As you can see from above, I’m pretty bullish on investing in Jobs Act companies and it’s prospects to help small businesses and create jobs. I have not yet invested in non Jobs Act Companies as an accredited investor. I’ve looked at non Job Act investments and it is now my opinion that the valuations of non Job Act investments look expensive at this time. Until such time that non Job Act investments are more reasonably priced, I will continue to invest in Job Act startups.
Below is the percentage breakdown of the group of investments that I’ve invested in through the Jobs Act.
|Alcoholic Beverages||4 percent|
|Film Industry||51 percent|
|Real Estate||12 percent|
The Jobs Act has given me access to a new class of Investments other than stocks. I try to diversify my alternative investments. I’m bullish on the film industry and its prospect of use cases for this new and exciting method of fundraising. Jobs Act investments are long-term investments and are relatively risky. Investments are made for a long length of time. Investors may not see any type of return for years. This is one of the things that makes it an alternative investment. To date, I haven’t seen any return on any of my Job Act investments that I’ve made since 2016. Though I haven’t seen any return as of yet, I’ve had the pleasure of tasting the alcoholic beverages from which I’ve invested or watching a movie in a cinema for which my investment helped produce.
Jobs Act History Recently Made in the Black Community
Tulsa Real Estate Fund
The first black owned real estate crowd fund platform made history on June 1st, 2018. A black owned SEC approved real estate crowdfunding platform called “Tulsa Real Estate Fund” raised over 5 million dollars in 24 hours. This is quite amazing. The “Tulsa Real Estate Fund” is ran by CEO Jay Morrison. Jay Morrison is a black 2 percenter above average black real estate investor who went from prison to the boardroom.
The main goal of Tulsa Real Estate Fund is to revitalize the black community via real estate. I’m not normally big on real estate investing as a primary investment class for blacks, but I did invest in the Tulsa Real Estate Fund. I respect the way Mr Morrison and his team launched Tulsa Real Estate Fund and how they created their own real estate investment platform instead of using someone else’s platform. They now have a real estate Jobs Act platform that they can grow for future deals. They took the time and submitted all the paperwork needed to register with Security Exchange Commission (SEC).
I’m happy to be an honorary founder of Tulsa Real Estate Fund. I do hope that Tulsa Real Estate Fund will meet its goal of revitalize the black community through real estate. I also think if successfully done Tulsa Real Estate Fund has the greatest opportunity to one day be a public company just purely off of the number of shareholder and dollars that’s it has been able to raise from the crowd. This is highly dependent on Tulsa Real Estate Funds ability to successfully execute on its plans to revitalize the black community and its ability to successfully give back returns to its shareholders.
Black Momma Tea & Cafe, Inc
Another black small business startup named “Black Momma Tea & Cafe, Inc” also recently made Jobs Act Crowdfunding history. Black Momma Tea & Cafe raised the most funds in Jobs Act history to date as a black female owned business. Black Momma Tea & Cafe impressively raised 430k and counting through the Wefunder platform. Black Momma Tea & Cafe is led by its CEO Vanessa Braxton. Vanessa Braxton like Jay Morrison is also a black 2 percenter above average black. While, I decided not to invest in the Black Momma Tea & Cafe’s WeFunder campaign, I do encourage other investor to do their due diligence and take a look at the Black Momma Tea & Cafe’s Wefunder campaign. The Wefunder campaign closes in a few days (mid June 2018).
More Black Businesses Need to Apply for Jobs Act Investments
A black owned real estate company and a black female owned tea company made history and raised significant amount of capital because of the Jobs Act. The amount of capital that both companies raised shows the potential value of this new method of raising capital via the crowd for startup black businesses. While both Jay Morrison and Vanessa Braxton have clearly shown the potential for black businesses to raise money from the crowd, we need more companies like these raising money via crowdfunding.
I’ve personally made a concerted effort to invest in black businesses via the Jobs Act. I do hope that more black businesses use it to raise much-needed funds for black startups. Black businesses are normally under capitalized and should be prime candidates for raising capital in a non-traditional method of raising funds such as crowdfunding. It’s often times difficult to find good qualifying investment worthy Job Act Black businesses.
As of this writing, I now invest about 30 percent of my Jobs Act Investments in Black businesses. Given that blacks are 13 percent of the population, 30 percent is an admirable investment percentage. As I raise my current alternative investment allocation of 4 percent of networth to 10 percent of networth in the coming years, I do hope to have more black business to choose from in the future. This is highly dependent on black businesses applying to seek investments from Jobs Act investors.
Summarizing the Importance of the Jobs Act to Future Prosperity
The Jobs Act is so important to the economic future and prosperity of the United States and it’s small businesses. We must all remember that a percentage of small business grow and become large businesses. The Jobs Act has given startup small businesses a new avenue to raise much-needed capital. The Jobs Act also serves as potential reversers of income inequality. It gives everyday unaccredited investors the ability to invest in small business startups.
Over time the Jobs Act will help create many new jobs. The multitude of ways that it will impact American society will be felt for decades to come. I believe the Jobs Act is the single most important piece of legislature of President Barack Obama’s presidency. Black small business owners should take heed of the recent successes in raising capital via the crowd. Over the next few years, we should look to use this new form of raising capital more often.