What the Heck is a Reg A+?

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Almost every day a Founder or an Investor asks us about a “Reg A+”, “Regulation A+”, “Reg A+ IPO” or a “mini-IPO”. So to be helpful we thought to consolidate some content that will help shed some light on this newer financial mechanism.

Obviously we don’t provide legal or financial advice and this intended to just jumpstart (pun intended) you in learning more about a key aspect of the The Jumpstart Our Business Startups Act, or JOBS Act. It is a law intended to encourage funding of small businesses in the United States by easing many of the country's securities regulations.

The way our CEO explains it is that the federal government now allows private companies to do a public offering and remain private (or semi-public). You can hear it straight from him here on Silicon Valley Game Changers:

 
 


We thought it would be helpful to provide examples from different perspectives on the subject to help you learn more so here are 5 angles and/or thoughts on the subject - with links to help you with doing the homework. We aren’t endorsing any of these firms or efforts but hope you gain some insights.

There have been some big wins utilizing this new path, numerous mistakes and there will be more wins and more missteps to come. One thing is for sure - Founders have a new disruptive path to fund innovation and Investors have a new way to diversify portfolios by investing in effectively a new asset class - that is, getting in early on a startup before it lists publicly on a stock exchange.

#1 Issuers - numerous companies have communicated the intent, the in-process aspects and/or completion of an offering with some example press releases for your reference:


#2 Bankers/Markets/Lawyers - viewpoints from the exchanges, broker-dealers and attorneys

  • "NASDAQ WELCOMES CSSE, THE LARGEST EXCHANGE-LISTED REGULATION A+ IPO IN HISTORY" - a release on the NASDAQ website by NASDAQ here

  • Manhattan Street Capital: Reg A+ can be used for an IPO to the NYSE or NASDAQ (here)

  • "For entrepreneurial and established small cap companies interested in conducting an IPO or completing a follow-on offering, Regulation A offers a streamlined pathway for efficiently raising up to $50 Million in capital." (here from OTC Markets)

  • SeedInvest: Raising Capital using a Regulation A+ Mini-IPO

  • StartEngine: Regulation A+: What Entrepreneurs Need to Know

  • CrowdCheck: 1-K filing time again

#3 Media - thoughts from the financial press:

  • "Third IPO Using Regulation A+ Lists..." (here from Forbes)

  • "Chicken Soup for the Soul stock debuts on Nasdaq after crowdsourced IPO" (here from CNBC)

  • "The First Regulation A+ IPO To Deliver Rapid Online Investment" (here from Forbes)

  • "...as the first Regulation A+ IPOs are now listed on two national stock exchanges" (here from Market News)


#4 FINRA - the Department has specific guidance on their Regulation A+ page

  • "The Department recommends that the filing is identified as an IPO unless the issuer is already a reporting company and has previously completed its IPO" (here)


#5 SEC - the SEC on its website:

  • "Regulation A is an exemption from registration for public offerings" (here)

  • "What is an IPO? Historically, an initial public offering, or IPO, has referred to the first time a company offers its shares of capital stock to the general public. Under the federal securities laws, a company may not lawfully offer or sell shares unless the transaction has been registered with the SEC or an exemption applies.." (here)

  • On the SEC website as presented by WR Hambrecht to the SEC is a presentation that includes the statement "Elio Motors is the only traded A+ IPO (OTCQX); $17 million raised, 6,000 investors" (here)

  • The SEC has put out a concept release on harmonizing security offering exemptions such as Regulation D, Regulation A and Regulation Crowdfunding. They are seeking comments on 138 topics, including permissible methods for delivering the offering circular. You can learn more here.



 

Interested to learn how you can help build a safer America? Just click the button below to learn more about Knightscope’s Reg A+ IPO:

 
William Santana Li