Leading Crowdfunding Industry Analyst Firm, Crowdfund Capital Advisors, States Now is the Time to Update the Regulation to Further Enable Capital Formation
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
By Robert Hoskins, Crowdfunding PR
Horseshoe Lake, Arkansas – The Herbal Compliance Co. announced the launch of its compliance consulting services for legal medical cannabis and hemp businesses. This unique company will also be partnering with GrowthFountain to$1 million by selling equity through a unique form of investor fundraising called Title III, Regulation Crowdfunding (Reg CF).
Herbal Compliance fills a need created by differences in marijuana legislation at the state and federal levels. While it is currently legal in 26 states and the District of Columbia to grow and sell marijuana for medical purposes, it is still illegal on a federal level, resulting in thousands of conflicts between state and federal regulations.
“Understanding the laws governing medical marijuana and hemp is our core competency,” explains Chuck Carpenter, Herbal Compliance’s President. “But we also offer other types of business consulting like inventory management, branding, and employee education. Our mission is to help companies in this new area of American enterprise to grow and thrive.”
To fully fund their startup, Herbal Compliance is using a new form of funding enabled by recent changes in securities law in the JOBS Act called Regulation Crowdfunding. The rules for this sort of investing went into effect May 2016, allowing non-accredited investors to participate in a funding round for a private company for the first time in history.
“We’re excited to help Herbal Compliance raise the money they need to grow,” says Abe Orden, GrowthFountain’s Operations Manager. “For the first time in 80 years, average Americans now have the opportunity to support and invest in local businesses and entrepreneurs they believe in.”
Herbal Compliance’s campaign started on June 6, 2017 and will continue through Oct. 4, 2017. Their aim is to raise between $100,000 and $1 million with a minimum buy-in of $100 per investor.
The Herbal Compliance Co. provides companies in the legal medical cannabis and hemp business with services to ensure that they remain compliant with the law. Services include design and buildout, equipment fulfillment, regulator compliance, remote inventory control and reporting, vendor relationships, brand and marketing, and tax management and education.
GrowthFountain Capital LLC is a Regulation Crowdfunding platform aimed at simplifying fundraising and helping businesses build collateral. GrowthFountain is registered with the SEC and a member of FINRA.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
By Robert Hoskins, Crowdfunding PR
Cambridge, Massachusetts – Myomo, Inc. (NYSE MKT: MYO) announced the launch of its next-generation MyoPro® myoelectric arm orthosis (powered brace), the only lightweight wearable device that can restore function in the paralyzed or weakened arms and hands of individuals who have suffered a stroke, spinal cord or nerve injury, or other neuromuscular disability. With the orthosis, a paralyzed individual can perform activities of daily living including feeding themselves, carrying objects and doing household tasks, and many are able to return to work.
Even if you haven’t moved your hand and arm in years due to a neuromuscular injury or disease, it is possible that the MyoPro myoelectric orthosis may be able to help you use your arm and hand again
The product is currently being shipped to customers nationwide after a successful Title IV, Reg + crowdfunding campaign campaign conducted on Banq’s fundraising platform.
Also Read: Top 100 Equity Crowdfunding Sites in the United States
Following the intentions of the SEC, which enacted the formal rules passed by the Jumpstart Our Business Startups (JOBS) Act passed under the Obama administration in 2012, Myomo utilized Title IV, Regulation A+, also referred to as a mini Initial Public Offering (IPO), to raise a minimum target of $15 million.
Myomo is the first company to complete a mini-IPO under Reg A+. In accordance with a portion Reg A+ rules, Myomo stated its intent to list its shares on the NYSE MKT exchange soon after the Reg A+ offering closed and will be trading under the symbol “MYO.”
On opening day, NYSE MYO raised approximately $5 million by selling 665,498 shares of its common stock to the public at $7.50 per share. Share price crested on June 19th at $19.31 and is actively trading.
MyoPro 2 extends the capabilities of the previous device with significant enhancements, including interchangeable, extended-life rechargeable batteries for continuous daily use. Additional enhancements include an upgraded user interface, improved sensors and improved harness and finger grasp orthosis for more reliable and comfortable long-term wear.
MyoPro 2 is available in three models to match patient-specific needs:
“MyoPro 2 is the result of collaboration between our users, clinical partners and engineering team to help patients restore their activities of daily living,” said Paul R. Gudonis, Chairman and CEO of Myomo. “Early in our rollout, feedback from patients, physicians and the orthotics and prosthetics community has been very positive. We look forward to addressing the large unmet need in upper limb paralysis as we continue to bring MyoPro 2 to a larger market.”
Myomo, Inc. is a commercial stage medical robotics Company that offers expanded mobility for those suffering from neurological disorders and upper limb paralysis. Based on patented technology developed at MIT and the Company, Myomo develops and markets the MyoPro® product line of lightweight, non-invasive, powered arm braces to restore function in the paralyzed or weakened arms and hands of individuals that have suffered a stroke, spinal cord or nerve injury such as brachial plexus injury, or other neuromuscular disability such as amyotrophic lateral sclerosis (ALS) or multiple sclerosis (MS).
It is provided through clinical relationships with VA medical centers, leading rehabilitation hospitals, and Orthotics and Prosthetics (“O&P”) practices. Several hundred have been successfully used by patients. It is the only device that, sensing a patient’s own neurological signals through non-invasive sensors on the arm, can restore their ability to use their arms and hands so that they can return to work, live independently and reduce their cost of care.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
Miami, Florida – ArborCrowd, one of the top commercial real estate equity crowdfunding sites, announced today a new real estate investment opportunity – known as the Lago Paradiso. A profitable and stabilized multifamily complex, this property is located in Miami, Fla., one of the most international and desirable marketplaces to live in the United States.
A new commercial real estate investment offering, Lago Paradiso is a value-add, multifamily lakefront apartment complex located in Miami
ArborCrowd investors have the opportunity to own a piece of a $4 million equity stake in Lago Paradiso. The Property has a targeted 13 percent to 17 percent Internal Rate of Return (IRR) and a projected hold period of four to seven years.
The goal of the business plan is to cultivate tremendous value upon sale of the Property, while maintaining strong annual returns for investors. This will be executed through a value-add repositioning, experienced property management and operational efficiency.
“ArborCrowd is the engine that brings successful real estate investments with the industry’s best sponsors and crowd investors,” said Ivan Kaufman, Co-founder and CEO, ArborCrowd. “The long-standing relationships that ArborCrowd has developed with institutional real estate investors has enabled us to attract a network of successful leaders who know how to source, manage and execute some of the best multifamily deals in the country.”
ArborCrowd’s investment model is unlike other crowdfunding platforms – the quality of the real estate is at the core of the business. Other models pool investors’ money into funds that are blindly allocated to different assets. ArborCrowd created a better way to invest by providing investors the transparency and knowledge to choose what deals their money goes into.
“Looking at just the returns of a property are not enough. ArborCrowd will only post what we believe is a strong investment offering. In order to be confident in the deal, we hone in on the depth and breadth of the sponsor’s experience,” said Adam Kaufman, Co-founder and Managing Director, ArborCrowd. “This commitment to only presenting high caliber deals is proving to be successful as all our previous deals funded quickly – with ArborCrowd’s last equity raise oversubscribed in just three business days.”
Lago Paradiso Deal Highlights
The Property was acquired in May 2017 for $69.7 million. Lago Paradiso is a lakefront apartment complex that consists of 27 buildings with 424 one and two bedroom units – currently 97 percent occupied.
Lago Paradiso, a new commercial real estate investment offering, consists of 27 buildings with 424 one and two bedroom units
The business plan is to create value by increasing rents through renovations, and by implementing new property management and operational expertise. Robbins Electra and its affiliates own and operate more than 22,000 units. This extensive management experience, particularly in Florida, means the Sponsor is well equipped to manage rent escalations while leveraging proprietary systems to improve operational costs.
Lago Paradiso is located 20 miles southwest of Miami’s Central Business District and South Beach. This helps to strengthen the demand for the Property.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
San Francisco, California – HelloMD – one of the nation’s largest communities of medical cannabis patients – announced that it had received an investment of $200,000 from SeedInvest’s “Selections Fund.” The money will count towards the amount HelloMD is targeting to raise from the crowdfunding platform, as well as from accredited investors in its funding round.
HelloMD launched its crowdfunding offering on the SeedInvest platform last month and has already received over $1,216,314 from over 795 investors.
HelloMD launched its crowdfunding offering on the SeedInvest platform last month and has already received over $1,216,314 from over 795 investors for app that markets marijuana products/services
“We like what HelloMD has accomplished thus far and feel it’s well positioned to capitalize as an early leader in a rapidly growing market,” stated Ryan Feit, SeedInvest CEO and Co-Founder. “Our Selections Fund invests alongside individual angel investors in some of the most promising companies on our platform,” he continued.
Since launching service in California two years ago, HelloMD has developed a rapid following among medical marijuana patients seeking to remedy things like anxiety, stress and chronic pain to more serious medical issues like cancer and epilepsy. The site connects patients, doctors, retailers and brands in an online community where advice on product selection, health & wellness and anything related to medical cannabis can be discovered.
“We are on a mission to create the largest medical cannabis community and the first national retailer of cannabis products,” stated Mark Hadfield, HelloMD’s CEO. “We are thrilled that SeedInvest recognizes the value HelloMD brings to patients everywhere, and has decided to demonstrate that with a sizable investment of their own,” he continued.
HelloMD’s rapid growth has been fueled by its extensive library of proprietary patient generated medical information (question & answers about medical cannabis) as well as articles, videos and other unique content. Additionally, over 400 business partners (retailers and cannabis brands) have partnered with the site to make information available to customers seeking information on their use of cannabis. The company plans to use the proceeds of the equity round to expand it service offerings across all 30 cannabis legal states, as well as internationally.
HelloMD is the leading digital healthcare platform for medical cannabis patients. The service allows for easy, convenient online video access to physicians for medical cannabis consultations, recommendations to qualifying patients, product advice and more.
SeedInvest is a leading equity crowdfunding platform that provides individual investors with access to pre-vetted startup investment opportunities. SeedInvest has funded over 160 startups and boasts a rapidly growing network of over 160,000 investors. SeedInvest has had over 13,000 startups apply to raise capital since inception and has only accepted 1% of those companies to feature on the platform.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
Geneva, Switzerland – In just 35 days, Swiss brand MyKronoz, has now entered crowdfunding history: at $5.3 million, the game changing timepiece ZeTime has become the most-funded project from a European company, as well as the most-funded hybrid smartwatch ever.
ZeTime pre-orders now available on Indiegogo for $149, a discount of the future retail price of $199
Pre-orders for the ZeTime are now continuing on Indiegogo. With this achievement MyKronoz aims to become the worldwide leader in the hybrid smartwatch market segment.
Having already sold more than 2 million wearables since its launch in 2013 thanks to its “smartwatches for everyone” approach, accessible price points, a wide variety of models, and on-trend designs, MyKronoz is today an established and leading player in Europe.
The latest success of its crowdfunding campaign confirms MyKronoz bold leadership ambition to conquer the world outside Europe, especially in North America and Southeast Asia where thousands backers have supported this Swiss innovation.
MyKronoz is determined to accelerate its expansion across a network of strategic retail partners and increase its global market share, both with ZeTime and the rest of its $39 – $199 product range.
Today, MyKronoz is the first to offer a smartwatch with mechanical hands over TFT color touchscreen. This pioneering engineering means ZeTime is able to blend the classic design of a traditional timepiece with the most advanced features of a smartwatch, while making no compromises in quality of the materials, water resistance or battery life.
Proprietary ‘Smart Movement’ technology enables these always-on hands to function for up to 30 days with a single charge, while adjusting to users’ timezone, as well as aligning to make sure they do not obstruct visibility of the screen when reading notifications.
Combining Swiss watchmaking with wearable tech expertise
“We are achieving this success in the context of a wearables market where mainstream adoption has not yet taken off. So we decided to create a new dynamic by delivering the perfect hybrid smartwatch without compromises,” said Boris Brault, CEO and founder of MyKronoz. “Bringing the best of Swiss design and watchmaking expertise into a wearable device. ZeTime embodies this vision, and demonstrates our position as a game changer and fierce challenger to both established watchmakers and wearables players.”
Brault continued, “The huge momentum of this Kickstarter campaign has really been another market validation for us: both on the potential of hybrid smartwatches, and the international growth of our Swiss Brand thanks to this fantastic innovation. We have really felt an incredible amount of passion from our backers, and impatience for our product. This helps us to pursue our ambition to become tomorrow’s leader in new generation watches.”
Behind this groundbreaking success story lie 26,828 backers, a community that truly collaborated to build the ZeTime together. After raising 500% of their original funding goal in less than 24 hours on Kickstarter, MyKronoz surveyed contributors for stretch goal ideas.
Suggestions flooded in, ranging from “Kickstarter exclusives” such as a limited-edition watch engraving and “Kickstarter Green” stitch carbon wristband, to the more technically demanding such as upgrading the watch’s original Gorilla Glass protective screen to Sapphire Glass.
While pursuing its mission to make the perfect and most universal smartwatch, MyKronoz was able to integrate not only these features, but also to launch a much-requested 39mm “Petite” version of ZeTime, ensuring that all consumers could find the model that fits their wrist, however wide or small.
This community engagement, visible in the over 8,000 comments posted on the campaign’s front page alone, was amplified further during its two Kickstarter Live broadcasts: more than 3,000 simultaneous users attended to meet and chat with the company CEO, CPO and CMO, and see close-ups of product prototypes.
MyKronoz is extremely grateful to Kickstarter community for ZeTime’s success: the $5.3 million total has earned the campaign a solid place in the platform’s hall of fame.
However, the Swiss challenger is not stopping there: with pre-orders now available on Indiegogo from $149, a discount of the future retail price of $199.90 (shipping in October for Regular version, December for Petite version), it is not too late for those who missed the Kickstarter to claim a piece of this smartwatch revolution.
ZeTime: Breaking tech barriers to be an elegant daily companion
A classic take on wearable technology, ZeTime has a sleek stainless steel watch case available in two sizes (44mm & 39mm) inspired by the finest Swiss design, along with a variety of interchangeable digital watch faces and straps created to fit every style.
ZeTime is set for action with a 3-axis accelerometer and an optical heart-rate sensor to track activity and sleep. With waterproof performance (up to 30 meters’ depth), ZeTime provides the quality and versatility expected from traditional high-end timepieces, at a much lower price.
ZeTime belongs to the fast-growing segment of hybrid smartwatches, which at first glance look and function like traditional analogue watches but include smart features such as activity tracking, heart rate monitor and notifications. Accounting for a 7% share of smartwatch sales in 2016, market research firm Counterpoint Technology predicts hybrid smartwatches will rise to a 12% share in 2017, doubling in revenues to more than US$ 1 Billion.
Though both luxury traditional watchmakers and wearable tech brands are turning towards hybrid models, with ZeTime, MyKronoz is the first to drill a hole in a TFT color touchscreen display to incorporate mechanical moving hands.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
Los Angeles, California – Crowd Invest Summit, the country’s largest crowdfunding investment conference, taking place on September 6th and 7th at the Los Angeles Convention Center, has announced that it will be expanding its focus on Real Estate Crowdfunding.
Since the signing of the JOBS Act in 2012, Real Estate Investing has been the fastest growing segment of the new Crowdfunding Industry. According to CBRE, the real estate has more than a $1.7 trillion dollars worth of dry power ready to be invested in residential and commercial real estate deals.
“We expect over 3,000 attendees at Crowd Invest Summit this September, a significant portion being investors who are looking to learn about new opportunities,” said Alon Goren, co-founder of Crowd Invest Summit. “Real Estate investing has been a major focus at the summit, and because of overwhelming demand, this September we’re expanding on the topic.”
Crowd Invest Summit will feature the crowd investment industry’s top leaders, investors and firms covering real estate investing over the span of two days in September:
“As one of California’s preeminent real estate and business law firms, we are excited to partner with Crowd Invest Summit for its first-ever discussion on the emerging issues and opportunities presented by the ever-growing real estate crowdfunding market,” said Chuck Jarrell, Partner, Allen Matkins. “Crowdfunding has become an integral part of real estate investing and a topic that will resonate well with conference attendees.”
“We are excited to be back at Crowd Invest Summit this September to discuss how we’ve quadrupled our investor base by combining technology and marketing with an institutional approach to real estate investing,” said Michael Episcope, Principal, Origin Investments.
“Commercial real estate is no longer reserved for the wealthy. Now, everyone has the ability to passively invest in multi-million dollar properties, all thanks to crowdfunding,” said Matt Schuberg, CEO, RealCap. “We are very excited to come back to Crowd Invest Summit in September to bring these types of opportunities to the masses.”
“401(k) and IRA accounts provide access to 12 times more investment dollars than checking and savings accounts,” said Todd Yancey, CSO of IRA Services. “We are excited to explain the process to real estate investors at Crowd Invest Summit how to easily access that capital.”
“Now more than ever real estate companies should focus on the fundamentals and principles in mitigating risks to investors capital. Crowd Invest Summit offers both Real Estate Companies and potential investors to engage first hand and learn more about the risks and rewards of investing in Commercial Real Estate,” said Rayaan Arif, CEO, FundingTree.
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Chicago, Illinois – The Financial Poise Webinar Series plans to explore the purchase of ownership shares in private companies via equity crowdfunding websites. “Crowdfunding” for this series refers both to investments made in this way by accredited investors – given greater scope by Title II of the 2012 JOBS Act – and those made by non-accredited investors under Title III of the JOBS Act.
Episodes in the series address the modes of angel investing in a company during its early stages, the opportunities and perils of crowdfunding real estate investments, the money-raising entity’s perspective, and a close look at crowdfunding options under federal and state law.
The first episode of the Equity Crowdfunding series, Title III, Regulation A+, and State Crowdfunding Regimes, features Moderator Chris Cahill of Lowis & Gellen. He is joined by Jordan Fishfeld of CFX Markets, Andrew Stephenson of Crowdcheck, Amy Wan of CrowdfundingLawyers.net and Alex Davie of Riggs Davie.
“Crowdfunding” is an elastic term, covering general solicitation of accredited investors as well as equity investments in private companies available to all investors (Title III). Private companies within certain size limits may be able sell shares to all investors under Regulation A+. State crowdfunding laws may complicate the picture or afford more opportunities, or both. Panel discussions will look at a range of “crowdfunding” topics.
Each episode will be engaging, sometimes humorous, and filled with conversations designed to entertain as it teaches and will be of value even to seasoned crowdfunding professionals. And, each episode in the series is designed to be viewed independently of the other episodes, so that participants will enhance their knowledge of this area whether they attend one, some, or all of the episodes.
Future episodes of the series will include webinars discussing angel investing, real estate investing, and raising money for a start-up through equity crowdfunding. Each Financial Poise Webinar episode is delivered in plain English understandable to business owners and executives without much background in these areas.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
Washington, DC – The SEC just released a white paper entitled, U.S. securities-based crowdfunding under Title III of the JOBS Act, which analyzes crowdfunded offerings during the first six months following May 16, 2016 when Title III, Regulation Crowdfunding become official. The SEC’s white paper, which was prepared for Scott Bauguess, the Acting Chief Economist and Acting Director of the Division of Economic and Risk Analysis (DERA), noted that the majority equity crowdfunding offerings to date have not utilized Regulation D as much as predicted.
The white paper does go into great detail about five largest Title III crowdfunding portals based on the number of offerings, which accounted for 71% of the offerings launched during 2016. The five largest Title III crowdfunding sites also accounted for 64% of the total amount of funds raised. And while more 20 crowdfunding sites were listed, most of the offering activity was limited to 25% of active platforms in the Title III crowdfunding marketplace. And, if you ran the numbers for completed offerings, you would see that the top five largest intermediaries accounted for more than 90% of the market share.
The table below low shows the list of the Top Performing Title III Crowdfunding Portals sorted on the number of initiated offerings and then by the target amounts of the initiated offerings, excluding offerings withdrawn as of December 31, 2016.
Many people want to know what the types of Title III crowdfunding campaigns were the most successful. Preferred Equity led the pack at 36%, followed bySimple Agreements for Future Equity at 26%, Debt at 20%, Units at 7%, Convertible Notes at 6% and Miscellaneous accounted for the remaining 5%, which included Revenue Sharing and Membership / LLC Interests.
Another interesting way to look at growing crowdfunding industry is to examine what states launched the most successful Title III Equity Crowdfunding Campaigns. In the table below you can see that California/Silicon Valley launched the most Title III crowdfunding campaigns, followed closely by Texas/Silicon Hills at 19%, New York at 14%, Massachusetts and Illinois tying at 9%, Delaware, Florida, New Jersey, Oregon, and Pennsylvania bringing up the back to the pack, all with 5%.
Because many industry experts have stated their concerns that the SEC’s decision to severely restrict the general solicitation guidelines with regards to advertising their crowdfunding deals to the masses of non-accredited investors, the white paper also took a close look at how many Title III Regulation Crowdfunding Campaigns had previously or subsequently conducted an offering under Regulation D or Regulation A.
As shown in the table below, as of January 15, 2017, approximately 15% of offerings initiated during 2016 (excluding withdrawn offerings) were by issuers that have also reported offerings under Regulation D either before or after the initial crowdfunding filing. And, approximately 3% of issuers have issued Regulation A+ filings as of January 15, 2017.
Among crowdfunding issuers, approximately 12.9% of offerings were by issuers that had filed the first Form D notice prior to the first crowdfunding filing and approximately 2.5% of offerings involved issuers that had filed a Form D notice after the first crowdfunding filing. For about 8.6% of offerings, excluding withdrawn crowdfunding offerings, a Form D filing was made within one calendar year before or after the initial crowdfunding filing. Consistent with their young age, the SEC determined that the majority of the crowdfunding issuers were more likely to be new startups rather than “fallen angels.”
Overall, these results suggest that crowdfunding is attracting issuers that have not extensively used other private offering exemptions, such as Regulation D, which is otherwise a very popular private offering exemption among similarly sized issuers as those initially availing themselves of the Crowdfunding market. The initial evidence is points to the fact that Title III, Regulation Crowdfunding is indeed providing a new source of capital for entrepreneurial and small businesses that may not otherwise have had access to capital through alternative capital raising channels.
The white paper also made a point of covering the following facts and figures.:
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
Austin, Texas – Trying to figure out if Title IV Reg A+ Equity Crowdfunding is the right fundraising tool to help your company move to the next level? Most people consider Reg A+ to be one step below issuing an IPO (Initial Public Offering) at a fraction of what it usually costs, thus it is also known as a Mini-IPO.
Most financial analysts consider existing businesses with several years of operations and generating significant revenue from multiple product/service lines to be the best candidates to launch a Reg A+ crowdfunding campaign. Smaller investment bookrunners will argue that even startups and small businesses are good targets to raise money using Reg A+, especially if they have goal of going public in 18-to-24 months based on certain revenue milestones.
If you cannot answer “yes” to the majority of these questions, then your business may not be ready to launch a Reg A+ equity crowdfunding campaign. These are many of the milestones that private equity investors and venture capitalists like see in a pitch deck to make your company worth serious consideration for a seed stage or private equity investment. If not, use this list to set some goals and objectives for your business and work hard to achieve them.
If you think you are serious about issuing a Reg A+ offering, it would be wise to read through the following white papers on Title IV Reg A+ vs. IPOs. Learning how a bookrunner works with various investment banks, institutional investors, venture capital and private equity firms can provide valuable insight into how Wall Street has been raising money for startups for the past 100 years.
The white papers will also provide key insights into how much money it will cost as well as the actual fundraising process including what it takes to put together a “Pitch Book” and how to market it via “Dog and Pony” investment road shows. The key to raising for a company’s management team to travel from city to city meeting with potential investors to pitch Reg A+ investment opportunities.
The SEC has previously stated that the primary purpose in adopting Reg A+ was to provide a simple and relatively inexpensive procedure for small business use in raising limited amounts of needed capital. Reg A+ issuers submit a paper-based offering statement to the SEC; this offering statement is essentially an abbreviated version of an IPO prospectus and it must be “qualified,” or cleared, by the SEC and delivered to prospective purchasers.
In addition to SEC review, Reg A+ offerings have traditionally been subject to review under state securities laws (also known as “Blue Sky” laws). In comparison, a traditional registered IPO listed on a national exchange is exempt from Blue Sky requirements. Securities sold in a Reg A+ offering are freely transferable in the secondary market, though Reg A+ issuers are not subject to Exchange Act reporting requirements.
Title IV of the 2012 JOBS Act directed the SEC to expand Reg A to exempt offerings of up to $50 million in equity, debt or convertible securities. The law mandated that issuers relying on this new exemption would be required to file audited financial statements with the SEC on an annual basis.
However, without infrastructure currently in place for A+ securities to trade on national exchanges, lawmakers left it within the purview of the SEC to settle the state jurisdiction question by establishing the definition for “qualified purchaser” in the rulemaking process.
The SEC’s final rule was adopted on March 25, 2015, and became effective during the summer of 2015. In the rule, the SEC expanded Regulation A into two tiers: Tier 1 for offerings of up to $20 million and Tier 2 for offerings up to $50 million.
By removing key procedural obstacles and introducing common-sense investor protections, this new Reg A+ framework creates a viable capital-raising alternative for issuers that want to remain independent and innovative. Below are some of the key provisions included in the SEC’s Reg A+ rule:
Securities offered under Reg A+ are freely tradable, which makes them more valuable to employees, investors and founders. This is beneficial for investors but also for issuer constituents, who may be early investors or insiders, seeking liquidity. The issuers’ choice of venue is mostly to do with the size of the offering and the company’s market capitalization.
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Robert Hoskins
(512) 627-6622
@Crowdfunding_PR
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