If you own or operate a small business and looking for investors, Regulation A+ might just be the way to go. On June 15th, 2015, Regulation A+ (also known as Title IV of the JOBS Act of 2012) officially became available as a means for businesses to raise money from non-accredited investors.
Most small businesses can’t afford the cost or time required to go through a full fledged IPO, which makes Regulation A+ very attractive. As an example, real estate developers can now solicit equity fundraising in the form of “mini-IPOs” or “IPOtogo”, allowing customers and your project evangelists to buy shares in a company that isn’t (or may never be) a publicly traded entity. Regulation A+ allows you to raise up to $50 million, so we are talking substantial money!
The advantages to this are numerous and obvious in that your investors become advocates of your company and become eager consumers of your products or services. In addition, with Reg. A+, small businesses can raise money without the expense of hiring expensive lawyers, accountants, etc to prepare paperwork required by the SEC.
Regulation A+ has just recently taken effect, so we’ll all have to see how this all pans out. As more companies go down the Regulation A+ path, the industry will learn quickly what is working and what isn’t. While much cheaper than going the traditional IPO route, businesses should still be ready to spend approximately $10K to create their Regulation A+ IPOtogo and different rules apply depending on the amount you are looking to raise. (up to $20 million or more)