JOBS Act a positive step for Montana business

By Brett Baker and Rob Bargatze

On April 5, President Obama signed into law what may be the most important recent legislation impacting the financial future of smallMontanatechnology start-up 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 workforce. The Act passed both the U.S. 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, from his ongoing discussions with small emergingMontanacompanies, he is well aware of the fact that it has been difficult for high tech and biotech companies to raise capital here; the economic recession of recent years has 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 reduce 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-payingjobsby supporting and facilitating successfulMontanastart-ups.

Some of the key elements of the JOBS Act include:

1. Allowing private companies to increase the number of share holders from 500 up to 2,000.

2. Eliminating the prohibition against general solicitation and advertising of certain private stock offerings.

3. Allowing private companies to raise up to $1 million, during a one-year period, through “crowdfunding” from an unlimited number of investors.

4. 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.

5. Providing investors with improved accessibility to investment opportunities in privately held companies.

The rollout of the Jobs Act will take approximately one year, and lawmakers will work closely with federal regulators to enact this legislation in a way to maintain the delicate balance that is 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 ofMontana.

LigoCyte Pharmaceuticals, Inc. and Microbion Corporation are two local companies developing important new drugs. LigoCyte is in human clinical trials for the development of a vaccine to protect against norovirus (aka. “the stomach flu”), and 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 (NIH) and the Department of Defense (DOD). The interest of NIH and the DOD in ourBozemancompanies emphasizes the potential for our products to protect the health of Americans and our injured military personnel.

We applaud the bipartisan efforts that have resulted in the passage of the JOBS Act, providing new opportunities both for investors and for entrepreneurs. Both of our companies providejobsto the local economy, and have the potential to provide morejobsin the future with the enhancements to financing opportunities and investor protection that the JOBS Act is designed to provide.

Brett Baker is the founder, president and CEO of the Microbion Corporation. Rob Bargatze is the chairman of the Montana BioScience Alliance and co-founder of LigoCyte Pharmaceuticals, Inc.

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