Federal JOBS Act will boost Montana tech start-ups

President Barack Obama recently signed into law what may be the most important recent legislation impacting the financial future of small Montana technology startup businesses. Known as the JOBS Act (Jumpstart Our Business Startups Act), it is designed to improve the access of emerging companies to much-needed financing to enable product development, company growth, and an expanded work force. The act passed House and Senate with overwhelming bipartisan support and seeks to put into balance the protection of investors and facilitation of small company access to capital.

Montana Sen. Jon Tester played a major role in writing and sponsoring key elements of the act. As he stated on the Senate floor, it has been difficult for high tech and biotech companies to raise capital here; the recession made raising such capital especially challenging. His hope, and ours, is that the JOBS Act will ease this effort, allowing small companies new access to a broader set of investors and reducing the regulatory burden that comes with a high cost for remaining compliant.

Our expectation is that the act will significantly increase the opportunity for Montanans to find well-paying jobs by supporting and facilitating successful Montana start-ups.

Key elements of the JOBS Act include:

•Allowing private companies to increase the number of share holders from 500 up to 2,000.
•Eliminating the prohibition against general solicitation and advertising of certain private stock offerings.
•Allowing private companies to raise up to $1 million, during a one-year period, through “crowd funding” from an unlimited number of investors.
•Revising Regulation A to allow companies to raise up to $50 million in a given year from a previous limit of $5 million, a change which is potentially critical to companies seeking to fund human clinical studies of new drugs.
•Providing investors with improved accessibility to investment opportunities in privately held companies.

Rollout of the Jobs Act will take about one year. Lawmakers will work closely with federal regulators to maintain the delicate balance necessary to enable small companies access to critical investment funds while concurrently protecting investor interests. Our hope is this act will release the current financial stranglehold on small companies and define a new path to growth and prosperity for the state of Montana.

LigoCyte Pharmaceuticals, Inc. and Microbion Corp. are two Bozeman companies developing important new drugs. LigoCyte is in human clinical trials for the development of a vaccine to protect against norovirus (“the stomach flu”). Microbion is in human clinical trials for the development of new antibiotics to treat antibiotic resistant infections, such as MRSA. Our companies have collectively benefitted through research support and research participation from the National Institutes of Health and the Department of Defense.

We applaud bipartisan efforts that resulted in the passage of the JOBS Act, providing new opportunities both for investors and entrepreneurs.