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Lack of access to financial capital is a barrier for many entrepreneurs who seek to grow their business venture. In an effort to democratize the entrepreneurial ecosystem, Congress and the Obama Administration enacted the JOBS Act, which implements and regulates crowdfunding. The democratic nature of the online crowdfunding platforms is a seemingly attractive solution to structural and institutionalized barriers to fundraising within the entrepreneurship ecosystem. Although the JOBS Act is a laudable step, the legislation does not in practice help entrepreneurs and herein lies one of its greatest shortcomings. The JOBS Act is unduly burdensome and is yet another barrier for entrepreneurs. Merely permitting underrepresented entrepreneurs and unsophisticated investors to engage in an alternative investment scheme of crowdfunding to raise capital does not solve the problems of access to traditional sources of capital. This article makes concrete proposals for addressing these shortcomings.


Law | Securities Law