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Democratizing Startups, Seth C. Oranburg

Law Faculty Scholarship

President Obama signed the Jumpstart Our Business Startups (“JOBS Act”) of 2012 into law to “help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.” The goal is to “democratize startups” by making capital available to diverse entrepreneurs in new geographies. Yet the net effect of securities regulations and market conditions is the opposite. Startup companies are encouraged to stay private so capital is consolidating in large, mature firms instead of recycling into new startups. Evidence of consolidation is that once-rare “Unicorns” (billion-dollar startups) now number at least 170. …