By Mike Green
April 7, 2012
President Obama signed into law the JOBS Act(Jumpstart Our Business Startups) on April 5, 2012. The historic law slightly alters the economic game across America that has long been tilted in favor of the wealthy. The new law opens the field of investing in high-growth startups and allows access for millions of Americans who do not meet the previous standard of $1M net worth and a minimum of $200K in new income — a standard set by the Securities and Exchange Commission (SEC).
The JOBS Act is a landmark evolution in control over job growth in America and is one of the most important economic laws that have a direct impact on Black America. It allows entrepreneurs to utilize a relatively new process called “crowdfunding” in raising essential funds for their companies. Without this funding, which typically comes from a process called bootstrapping (personal investment, friends, family, bank loans and other debt financing), the vast majority of entrepreneurs watch their ideas and opportunities die in the incubation or “seed” stage.
The Bureau of Labor Statistics data show 1.9 million Black-owned businesses in America in 2007. More than 1.8 million of those businesses were sole proprietors with zero employees. Thus, it’s no surprise there’s zero job growth and chronic high unemployment across Black America. The total of all those 1.9 million Black-owned businesses produced less than 1 percent of the nation’s GDP. And that was at the height of entrepreneurship in Black America … before the economic collapse.
Black entrepreneurs typically have fewer resources to tap in the bootstrapping phase. To raise funds they often seek angel investors, who help startups get past the proverbial “Valley of Death,” which is the timetable from the start of an entrepreneurial venture until it reaches the breakeven point. Without investment, most companies die.