We provide real world, effective Regulation A Funding advisory services for startup, growth and acquisition financing

Is a Regulation A+ Offering an IPO?

The answer to the “Is a regulation A+ offering an IPO” question is NO! It is certainly NOT an IPO – but it is similar in that it’s a viable means of raising capital for your business with the possibility of taking your company public on a major exchange such as the NASDAQ or NYSE. We’ve just seen that happen with the Myomo Regulation A+ offering, but going public in that manner is an option, NOT a requirement.

differencesMost companies don’t even want to list on a major exchange because the reporting costs are so high. Instead, some are looking to list their companies on the OTCQB or OTCQX as they are much more cost-effective and then looking to up-list when they become more solid with their financials and goals. Reg.A+ allows you to take your offering to both accredited and non-accredited investors, which makes Reg.A+ even more desirable (and different) from a traditional IPO. Strategies such as these are regularly discussed on the “Reg.A Money Show” podcast.

The Securities and Exchange Commission (SEC) allows you to buy, sell, and restrict liquidity of your Reg.A+ shares of your company after you complete your Regulation A+ offering, but you don’t have to list your shares on any market. Stock brokers can still broker sales of Reg.A+ shares after a company completes their Tier 2 Regulation A+ offering and has their shares qualified for a public listing on the OTC QB and QX marketplace. That’s the biggest reason we at the Reg.A Funding Group prefer Tier 2 over Tier 1 offerings – the upside is so much greater on Tier 2 because of the ability to list on an exchange. Here’s the differences between the two listing options:

  • OTCQB: $2,500 listing fee with a $10K annual renewal fee to OTC Markets and a Broker-Dealer must sponsor your offering with FINRA.
  • OTCQX: $5,000 listing fee with a $20K annual renewal fee to OTC Markets with background checks on the principals along with quarterly audited financials and yearly audits from a PCAOB auditor.

By satisfying the above requirements, a company doing a Tier 2 Reg.A+ offering then has the option to go public – and many will do so solely due to the improved liquidity it provides to its investors. With a much simpler process of qualification with the SEC, we call an Reg.A+ Offering an “IPO to-go™” because they are much more cost effective and the turnaround time is much shorter than a traditional IPO (or even a reverse merger).

Because the maximum raise on a Reg.A+ offering is $50 million per year, the reporting requirements of a Reg.A+ offering dwarf that of an IPO (which typically raises about $300 million). And the total costs of getting your Reg.A+ offering from start to finish are a lot less than that of an IPO as well! Much less! Contact an industry professional to find out how much an IPOtogo™ may cost for your particular situation and goals.

The fact remains that Regulation A+ offerings are real-life proven game changers in how companies are raising money through equity crowdfunding, and a fantastic alternative to the traditional IPO. Similar in purpose, yes… but certainly NOT the same vehicle by any means.