In April 2012, President Obama signed the JOBS Act into law.

The Jumpstart Our Business Startups Act isn't, at first glance, terribly exciting. Much of the bill is dense legalese that clarifies and extends the laws surrounding how businesses raise funds. It's the type of reading that will make your eyes glaze over; with one major exception.

Title IV of the bill allows ordinary people to make direct investments in companies in exchange for equity (or shares).

It's a radical change that could potentially revolutionize how savers invest their money, and how early-stage technology companies get the funds to bring their ideas to life. For the first time ever, it's possible for companies to issue shares in crowdfunding campaigns to the general public.

This is revolutionary.  Here's what you need to know about Title IV of the JOBS Act.

A Tale Of Two Investors

Before we go further into the logistics of the bill, I want to introduce the concept of "accreditation" to you. American law recognizes two kinds of investors: Accredited investors, and non-accredited investors.

The term Accredited investor is essentially short-hand for "rich". To be an accredited investor, you have to have an annual income of over $200,000, or over $1,000,000 in assets, not including your primary residence.

Then, there's non-accredited investors. These are what one could describe as "everyone else". We're talking about teachers, cab drivers, programmers, wait staff... You know. Ordinary folks, like me and you.

So, what's the difference?

When it comes to investments, quite a lot. Accredited investors have much greater investment opportunities. They're allowed, by law, to make investments that are considered high risk, like directly investing in an early-stage startup.

Non-accredited investors are, for the most part, limited to more conventional investment opportunities. The type you might get from a retail bank, or from a mutual fund. These are safer, but offer much smaller returns.

In short, there was a massive inequality in investment opportunities between the rich and the poor.

Title IV Changes Everything

Introduced last Friday, Title IV of the JOBS Act changes that.

Companies are now allowed to solicit a maximum of $50,000,000 in a 12 month period from accredited and non-accredited investors alike, although there are some caveats.

Investing in young, early-stage startups is extremely risky. Nine out of ten startups launched will inevitably fail, as funding dries up and revenue streams fail to appear. As OneVest CEO Tanya Prive explained to me in a phone interview, you should be aware there's a risk you could lose your initial investment.

Under the new rules, non-accredited investors are limited in how much they can invest. There's a hard cap set at 10% of the investor's net worth, or 10% of their income.

But while the risks of investing in a startup are there, they can be mitigated against by doing some homework. Privé explained to me how OneVest performs many layers of due-diligence before allowing a company to use their crowdfunding platform. Not only do they look at the prospective company's financials and traction, they also do background checks on the corporate leadership.

OneVest are apparently eager to avoid the fraud that has dominated traditional crowdfunding.

Future Rewards

Crowdfunding isn't, by any stretch of the imagination, new or novel. It's existed in some form or another since the late 2000's. Thousands of products, startups, and ideas have been successfully funded on IndieGoGo, Kickstarter, and sites like them.

But what happens when a crowdfunded product becomes so successful, the company behind them gets bought out for billions of dollars?

That's what happened with Oculus VR - the makers of the Oculus Rift virtual reality system. In 2012, they launched a crowdfunding campaign to raise money for the development of the Oculus Rift Developer Kit. Over 10,000 backers collectively contributed an incredible $2,500,000.

In return, the backers each received some kind of "reward", which ranged from posters, to units of the Oculus Rift DK.

Two years later, Oculus VR was sold to Facebook for an astonishing $2 billion. Many of the original backers were furious. They loudly complained about how they were betrayed, and how Oculus VR had sold out. They were angry because they didn't see a single cent of that unprecedented buyout, because they didn't hold any equity in the company.

Had Title IV of the JOBS Act been law when Oculus VR was trying to fund the development of the Rift, each of those backers could have theoretically exchanged their money for shares. Potentially transforming some of them into millionaires.

What Can You Invest In Right Now?

At the time of writing, Title IV of the JOBS Act has only been law for a day. But already, we've seen a number of companies take advantage of it to raise funding.

Many of them are raising funds on StartEngine.com - a platform that specializes in equity crowdfunding. Here's some of the most notable:

• Elio Motors is a Phoenix, Arizona based car manufacturer. Their flagship product is the Elio; an unusual looking, two-seater, three-wheeled car. The diminutive motor boasts an almost unprecedented fuel efficiency of around 84 miles per gallon, and will cost around $6,800 to purchase new. Elio have already raised $70 million in funding, and have attracted $18 million in reservations. They're looking for even more money, so they can bring it to production.

• Although very much a niche interest yet to penetrate the mainstream, e-sports are big business. It's estimated the North American e-sports market is worth $200 million annually, and is predicted to grow to almost $500 million by 2017. And that's a conservative figure. Santa Monica based XREAL wants a slice of this pie, and are hoping to raise enough money to build a mobile-oriented, e-sports franchise focused on Fortress Fury.In addition to owning a slice of XREAL, investors will also get other perks, including free in-app purchases for Fortress Fury.

• Then, there's OneVest. They're been around since 2012, and have connected accredited-investors with a broad and diverse variety of startups. They've worked with healthcare products, and guitar manufacturers, and even the Uber of private detectives. And they're looking for investment, too. They're using their own platform to raise funds, from accredited and non-accredited investors alike. There's a minimum investment of $5,000, and the owners are aiming for an 'exit', where all the shares are ultimately acquired by a larger company.

Don't Ditch Your IRA Just Yet

Title IV of the JOBS Act is huge. It democratizes the world of investing, and provides ordinary people with the same opportunities to invest that the mega-rich have. But it's worth noting that there's a massive element of risk involved.

Companies fail all the time.

If you invest in a company that fails, the odds of you getting your money back are slim to non-existent. Make sure you know exactly that you're doing, before you sign any paperwork. Do your homework, not just on the company itself, but on its founders and management, and on the market it is in. Get informed.

If you're not 100% comfortable, don't even think about investing.

Will You Be Investing?

Title IV of the JOBS Act has opened up the world of venture-capital and angel investing to everyone. There's money to be made, and even more money to be lost.

Will you be investing? Or are you planning to steer clear? Let me know in the comments section below.

Image Credits: Stock market collectibles via Shutterstock