The U.S. Senate has approved a bill that will make it easier for early stage companies to raise money by broadening the number of people that can invest in them and help companies file for initial public offerings.

But will it mean more biotechnology startups will have the money to survive the multiyear journey to bring their therapeutics or drugs to the finish line of regulatory approval and commercialization?

Or will it lead to more companies competing for smaller amounts of money?

James Greenwood, the president and CEO of the Biotechnology Industry Organization, said the Jumpstart Our Business Startups bill would make it easier for small, emerging biotechnology companies to raise money and reduce the hurdles that stymie them.

“These reforms are especially important to innovative biotechnology companies that do not yet have product revenue and must spend investor dollars on compliance rather than the search for cures and breakthrough medicines,” Greenwood said in a statement.

Greenwood said: “If burdens on public financing were removed, private investors would have greater certainty that the companies they help take public will have the chance to succeed. This confidence hopefully will lead to increased investments in promising science that could lead to treatments and cures for some of the most debilitating and life-threatening diseases.

It will cut red tape, which could be good and bad.

By eliminating some U.S. Securities and Exchange Commission regulations, the bill will set a lower bar for companies seeking investment. One way it will do this is by raising the number of shareholders allowed in a private company from 500 to 2,000. Under the bill, “emerging growth” companies with under $1 billion in revenue would not need to hire a independent auditor to check internal financial controls for five years after going public.

It also would repeal parts of the Sarbanes-Oxley Act, which may be the most troubling provision for some critics of the bill. The provision would allow “securities analysts covering these new ‘emerging-growth,’ or small, companies to collude with the banking arms of investment companies on stock research, thereby potentially opening the door for analysts to become mouthpieces for certain stocks rather than impartial observers.”

And there are liable to be more companies in search of naive investors who do not take the precautions of due diligence before parking their money with a potentially fraudulent business. Reuters cited North American Securities Administrators Association President Jack Herstein, who said the bill would “needlessly expose Main Street investors to greater risk of fraud by creating new jobs for promoters of Internet boiler-room investment scams.”

  • The more money there is, the more companies will look for it.

Investor attentions are likely to be divided and some may not have the stomach for a long-term investment that could take several years before approval by the U.S. Food and Drug Administration that has come to be the reality for drug development companies. Over time, the new, smaller investors that become eligible to invest will learn from the bigger players and park their money where they are most likely to be guaranteed a return on their investment.

  • Crowdsourcing gets legalized.

Under the bill, companies could file with the SEC to raise up to $1 million through crowdsourcing. The Senate bill added an amendment that would require companies doing this to publish audited financial statements. People that have a vested interest in a company developing a drug or therapy that could help cure their disease could get more people involved in funding those companies.

  • More companies can file for IPOs.

In the life science community, initial public offerings have come to be viewed as simply another way to finance a company and are no longer an exit. If the legislation brings more money to life science companies, it could mean fewer IPOs and more companies could potentially afford to stay private, giving them a little more control over their destiny.

  • More jobs?

One of the reasons this bill was proposed in the first place by its sponsors was to create jobs. Although if more companies are started through the legislation, it stands to reason there would be more jobs, but how many are likely to be added is an open question.

The legislation is expected to go back to the House to be voted on next week.