According to a recent report from the Securities and Exchange Commission, as of end-of-year 2016 only about 56 of the 97 companies that pursued Regulation A+ Offerings reported “successful outcomes”. Now while the jury may be still out as to what determines a “successful outcome”, the fact that all Reg.A+ projects don’t always succeed shouldn’t surprise anyone. When you’re talking raising money through Regulation A+ equity crowdfunding, you’re talking about something that’s very difficult to do. If it were easy, everyone would be doing it successfully and that certainly is not the case.
Part of the problem with raising money via a Regulation A+ offering is that there’s no “secret sauce” template anyone can use. There’s no “tried and true” formula for success. What works in attracting accredited investors and brokerage firms for some may not work for others. However, the success of many Reg.A+ issuers are giving many would-be Reg.A+ “contenders” the idea that it’s as simple as getting your lawyer, doing an audit, and filing your paperwork with the SEC for an easy approval and the investors start banging on your door to invest. Not so!
If there is a secret, it no doubt involves effective marketing of the company’s Reg.A+ offering. A big difference between a Regulation A+ offering and a traditional IPO is that Reg.A+ issuers are allowed to actively promote and advertise their deals and they can market these offerings to both accredited and non-accredited investors. That levels the playing field and provides another reason why Regulation A+ is such a game changer. No longer are great opportunities available only to institutional investors on Wall Street. With Reg.A+, the little guy is king too! But you have to reach them correctly. That is the key.
By going directly to your current customer base, you can turn your best customers and loyal evangelists into investors in your company. As an example, take the recent IPOtogo by Chicken Soup for the Soul Entertainment, who raised $30 million dollars pricing shares at $12 under Regulation A+ in just five weeks time! They went directly to their enthusiastic fan base with no “quiet period” restrictions that come with traditional IPOs. CSSE has quickly grown from $8.7 million in 2016 to $20 million by the end of 2017. Their operating earnings are projected to reach $12 million in 2017, over 3 times compared to 2016! They are currently listed on the NASDAQ under the symbol CSSE.
Their success lies in the ability to create the right formula and the right story at the right time to excite their potential investor base – and they didn’t do that by themselves! They partnered with high profile individuals such as Ashton Kutcher and other industry experts to make their offering successful. It’s all about the understanding that marketing is an art-form where social media is your stage.
Social media allows you to reach people who will respond if your message is compelling. The trick is hiring the right agency and/or consulting firm who can take your company through the entire process successfully, which may entail video production, event creation, or even appearing on radio podcasts or TV spots. And while some fail, others like Chicken Soup bask in the glory knowing their marketing success story may provide a strategic roadmap that other Reg.A+ contenders may want to emulate – perhaps with the help of the Reg.A Funding Group.