It used to be that only accredited investors could invest in company startups. However, Title IV of the JOBS Act has changed all that! Since small business arguably creates jobs for the middle class, this change is literally a game changer!
Also referred to as “Regulation A+”, companies can now raise up to $50 million from both accredited and non-accredited investors alike. Accredited investors make up less than 1% of the US population, so the investment opportunity flood gates are now open.
Regulation A is nothing new – it’s been around for years, but the restrictions and red-tape associated with the program made raising money very difficult. The newly revised documentation makes raising money with Reg. A much easier on what’s called “Tier 1” and “Tier 2” offerings.
If you own a startup company and are looking to raise money, pretty much anyone will now be able to invest in your company’s future, provided you do it right – which is why professional money raisers such as the Reg A Funding Group are so excited about the future of business capital funding.
Your customers can now theoretically (and realistically) become your investors as well. Happy clients are the evangelists of any company, and offering them the opportunity to be investors in the company’s growth only sweetens the pot. However, the process of raising money with Regulation A+ is not easy, and there are still many rules on how private securities are sold to the general public. The SEC is not going away. Selling securities to the public must be done with caution and in line with the securities regulations. Here are some items that need to be addressed for a successful Reg A+ offering:
1) The company must be incorporated in the United States.
2) The cost of documentation for such capital raises range from approximately $50K-$100K. You’ll need to budget for the creation of offering documents, circulars, audited financials, due diligence information, and SEC filing fees, among other expenses.
3) You’ll need to be looking to raise money for a Series A or later stage offering.
4) You must have audited financials (under Tier 2), organize your cap-table, and provide a independent auditor’s report.
Regardless, the entire process is quite appealing for companies to basically do a public offering without the major expenses and legal hassles of filing an S1 for a traditional IPO. (which could cost in the millions of dollars and take months to complete!) That’s why we’ve termed the Regulation A+ offering as an “IPOtogo” – and that’s also why you should contact us for a no-obligation confidential consultation to discuss the options available to your particular situation.