New federal rules that went into effect last Monday are allowing small businesses to tap into the investment desires of ordinary folks, giving companies of all shapes and sizes in all industries a needed alternative to traditional money-raising sources of capital such as angel investors and venture capitalists.
In a nutshell, the new rules allow individuals to put $2,000 or more per year (based on annual income and net worth) into a company in exchange for a stake in the business (think something like Shark Tank). Companies using this form of Regulation A+ paper can now raise up to $1 million annually.
Before Reg. A+, you had to be an ‘accredited investor” to participate in this kind of arrangement. But now, we are seeing more companies using this form of financing successfully.
The opportunity is great across all sectors, but the process is not simple or quick for that matter. It can get expensive too, so it’s not for everyone and major due diligence is required. In other words, you definitely need to seek guidance from professionals such as the “Reg.A+ Funding Group” to insure the process moves forward with successful results.
Reg.A+ Paper is different from what many may consider “traditional” crowdfunding platforms such as Kickstarter, GoFundMe, or IndieGoGo. You can only get perks and/or rewards via that route – with Reg.A+, you gain ownership for your contribution.
We are seeing a number of businesses diving deep into the Reg.A+ world, even in controversial industries such as cannabis-related endeavors. Pot Estate Holdings, Inc. is one such deal that is currently in their “testing the waters” phase. They are looking to raise money in a way that was previously unheard of, and a big makeup of that capital raise will be from small investors who have traditionally been unable to participate in such a lucrative opportunity before. (It’s always been reserved for the “big boys” – until now!)
All the cumbersome red-tape has been striped from the Reg.A+ process as a result of the JOBS Act of 2012, which was the impetus of this great alternative to crowdfunding as most know it. However, you’ll still need guidance – especially if you’re in the cannabis business – and if you want to go the route of Reg.A+, you’ll certainly need to do so carefully. You’ll have to create informational media that does the following:
- Highlight the strength and competency of the company and/or offering.
- Create the “sizzle”
- Explain how you plan to scale your idea and how it solves a particular problem
- Demonstrate that you understand all the company’s financials and costs involved from start to finish as well as the potential for the investor to make money by participating in your Reg.A+ deal.
This is what the Reg.A+ Funding Group does and more. That’s why we call the process an “IPOtogo”. And that’s why if your company is looking to raise any significant money, it’s probably a smart thing to do to contact us for a confidential consultation on getting you to that next level of success.