This story was written by Keith Dawson for UBM DeusM’s community Web site Business Agility, sponsored by IBM. It is archived here for informational purposes only because the Business Agility site is no more. This material is Copyright 2012 by UBM DeusM.

The JOBS Act Will Unleash 'Kickstarter on Steroids'

Crowdfunding of small businesses is set to take off in the US.

The JOBS Act will let small companies advertise for funds, raise funds from large numbers of small investors, and go public more flexibly. It will increase the options, and the agility, of small companies.

The House of Representatives just passed the JOBS Act, as revised by the Senate, and sent it to the President, who is expected to sign it. (The bill's name is a retronym for Jumpstart Our Business Startups.) The bill passed by large bipartisan majorities in both houses, a rarity in this political climate. All of the senators who voted against it were Democrats; they voiced concern that the bill does not do enough to protect naive investors.

The JOBS Act makes it easier to go public, easier not to go public, and easier to raise capital privately. Specifically:

Once the President signs the bill, it will take effect in about 9 months, after the SEC has had an opportunity to do some rulemaking.

Crowdfunding will provide another avenue for funding small companies, and will be particularly important in those regions of the economy far from the existing incubator, angel, and venture capital networks. That is, the JOBS Act will matter to Silicon Valley and other hotbeds of technology startups, but it will matter far more to people who want to start restaurants, dry-cleaning establishments, or plumbing suppliers.

Despite its too-cute, back-formed moniker, the JOBS Act will very likely end up creating a significant number of jobs. Recent research by the Kauffman Foundation, which looked at 30 years of job formation in the US, leads to the surprising conclusion that for every three jobs created by companies younger than five years, one job was lost in companies older than that. Collectively, older companies lost jobs in almost every year in the past 30. In other words, small companies create all of the jobs and then some. And the JOBS Act will spur the formation of small companies, to the extent that in time it may end up shifting the balance in the US more in favor of smaller companies and away from larger ones.

Over time, larger companies may have more difficulty recruiting and retaining highly qualified workers, as more people opt to start up and work in small businesses of all kinds.

Smaller companies are inherently more agile, and it is indisputable that larger companies have a harder time remaining agile as they grow. It is the job of this Website to provide assistance, advice, tools, and community for those enterprises that insist on growing their agility. Join us today at 1:00 pm Eastern time (10:00 am California) when our special guest Eric Christiansen will lead a live chat on the subject of size vs. agility. The JOBS Act is bound to come up.