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Will the JOBS Act Open the Floodgates to Startup Spam?

Imagine opening your email Inbox and getting a lot of solicitations from companies that are looking for money. If you thought it’s a hassle wading through many forums and Linkedin groups now when it comes to startup companies, wait until the dust settles with the JOBS Act. The JOBS Act has a particular provision that allows startup companies to talk about themselves. In other words, the JOBS Act allows startups to hit their networks, social media and other public places online and offline to let the word out about investing in their company.

What’s not to love? While the intention is good and who wouldn’t want to get more jobs created and jumpstart the economy, there are a few rough spots with the “General Solicitation Provision” of the JOBS Act. As you can well imagine, people who form startup companies are not particularly shy types; they are promoters and they are very big on self promotion. Couple this with the explosive viral nature of social networks like Twitter and Facebook (as we have written before) then you might have a possible spam explosion on your hands. That’s what’s at stake assuming that the SEC doesn’t do its job properly.

It’s a prime balancing act between creating jobs, getting the word out to people who are looking to invest in dynamic and fast growing companies or the next big idea and scammers as well as spammers teaming up to please investors so they can invest in dubious companies. The third element to keep an eye out on is just the bombardment of spam and solicitations from dubious and shady companies.

Of course, there are some built in limitations in this whole process. Anybody who’s serious about their own credibility is not going to go overboard and spam away. Real professionals know their limit and will not step over them. It should be very interesting how this all plays out.

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