Happy New Year!!! The stock market hit all-time highs in 2017 and many companies went public during the past year. So why is everyone talking about Regulation A+ offerings? Because Regulation A+ (Reg.A+) has opened up new investment opportunities that were previously unavailable to “small time” individual investors. We’ve said it time and time again: Reg.A+ is a playing field leveling “game changer” – and 2018 is poised to be even greater for those issuers considering using Regulation A+ equity crowdfunding to raise money for their businesses.
With direct investment access to companies in their early growth cycles, even non-accredited investors can get into the game, which was previously reserved only for the “big boy” institutional players before Reg.A+ came along. A big strength of Regulation A is that it allows investors to generate significant capital appreciation from an issuer’s desire to access capital markets such as the NYSE or the NASDAQ. But it’s not the Wild West here – all Reg.A+ offerings must be qualified by the Securities and Exchange Commission (SEC) and although Reg A+ removes a number of costlier filing requirements as opposed to traditional IPOs, each offering still must have its disclosure reviewed and each issuer is subject to ongoing reporting requirements.
The Jumpstart Our Business Startups (JOBS) Act, signed into law by President Obama in 2012, was created to ease regulatory restrictions to encourage startups and small businesses to create jobs and stimulate the economy. It seems to be working. With $600 million in capital raised since the birth of Reg A+, and 8 Reg A+ IPOs completed to national securities exchanges in 2017 alone, it’s clear that Reg A+ is expanding quickly, and with great momentum. Since June 2015 when Reg.A+ started, the SEC has received over 200 Reg A+ offering statements and have qualified 143.
Reg.A+ issuers come from a variety of industries, including real estate, pharma, and many forms of manufacturing. The numbers at FactRight speak for themselves – Regulation A+ is growing and all indicators point to exponential growth in 2018 for Reg.A+.
With the continued growth of the U.S. economy and job market, consumer confidence is high, and that means more investment into companies of all sizes. That trend will surely lift Reg.A to new heights in 2018 and beyond. In addition, the House Financial Services Committee recently passed 23 bills designed to further grow the economy which will fuel the need for growth capital by companies of all sizes.
Now that Reg.A+ has been proven, we’re going to see more traditional underwriters, institutional investors, big banks, and broker-dealers getting into Reg.A+ in 2018, which will also greatly propel the industry. With higher quality deals, these major players will allow issuers to raise more capital and help to provide liquidity to investors. In fact, we’ll probably also see Fortune 500 companies and celebrity names entering this market in some capacity as well (and a maximum amount raise of $75MM will not be surprising either).
For all these reasons, you’re going to see many more issuers looking into Regulation A+ in 2018 to access the capital they’ll need to expand and grow their businesses. You’ll also see investors take notice on a new way to be privy to investment deals previously not available to them. As with all investments, there are risks involved in a Reg.A+ offerings and sure, there will be bumps in the road, but all indicators and trends point to a terrific 2018 for explosive growth for Regulation A+ offerings, their issuers, and their investors.
At the Reg.A Funding Group, we saw this Reg.A+ growth curve happening years ago, so we created the “Reg.A Money Show” podcast to chronicle Reg.A+ as a informational source for those interested in the industry. Thinking about raising capital for your business with Reg.A+ equity crowdfunding? All you have to do is contact us for a no-obligation consultation to find out if Reg.A+ is right for you!