The highly
anticipated JOBS Act takes effect on Monday, and represents arguably the first
major formal commitment to startup funding by lawmakers in the US. The Jumpstart Our Jobs Act focuses on
eliminating the 80-year ban on solicitation of accredited investors. In layman’s
terms, start-ups are now allowed to market themselves to investors in a public
forum. This may sound like a minor improvement in an already highly saturated
and growing market, but it has opened significantly valuable channels to
companies down the long tail.
Prior to
the JOBS Act, crowdfunding was essentially the only form of public solicitation
of investors. Sites like Kickstarter blazed a trail that led to the inevitable
need for lower barriers to entry for entrepreneurial ventures. Now, companies
can seek out investors by any means necessary (within boundaries) including physical
advertisements and digital marketing. The question is, how does this change the
focus and priorities of up-and-coming companies?
Start-ups
will now need to focus their efforts not only on IP, but also on scale and
reach. Not to say that they shouldn’t be already, but awareness and positioning
have now become a crucial factor in pre-revenue status. Social, search and
display advertising will now have a dual-role, to focus both on acquiring
customers and attracting investors. I am curious to see how these organizations
walk the line between the two segments.
This act will
also catalyze a series of digital marketing firms to specialize in attracting
investors. These firms will conduct research and analyze data to outperform
their competition on metrics such as total dollars raised. Adding these
components to the digital marketing portfolio is a double-edged sword. Only
time will tell if this becomes a valuable channel for digital marketers.
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