Not every company is a perfect fit for conventional venture capital investment. In a recent blog post, Fred Wilson lamented the use of the somewhat degoratory term “Lifestyle Businesses” and instead suggested splitting companies up into three buckets:

1. Lifestyle – Too small for VC, but will generate enough annual cashflow to be a great business to own and operate
2. Indie – Might be large enough to justify and provide a return on a VC investment, but the desire to retain control and remain independent makes VC untenable for the entrepreneur
3. VC Fundable – Large enough to justify and provide a return on a VC investment and the founder is willing to exit at some point and provide a capital gain to the investors

What struck me about this breakdown is that these “Indie” companies could be a great match for using the new Regulation A+ which allows companies to raise up to $50M from the general public in a mini-IPO style offering.

By crowdfunding capital from the general public instead of venture capitalists, these “Indie” companies can avoid many of the strings that come with venture capital, including:

1. Board seats or board control to VC
2. Protective provisions requiring VC consent to take certain actions
3. Pressure to sell or IPO to provide a liquidity event
4. Being fired as CEO of a company you founded

Because shares issued in a Reg A+ offering are unrestricted, tradable shares, investors may be able to obtain liquidity without an acquisition or an IPO through Venture Exchanges (caveat: much needs to happen before this becomes a reality).

Reg A+ also allows for founders and early investors to sell some of their shares as part of the offering. The Reg A+ round can provide a chance to realize some liquidity for investors and employees who have invested in an “Indie” company early on in its life.

The big catch, of course, is that Reg A+ deals are registered with the SEC and therefore will require a lengthy and rigorous SEC filing and approval process.

Founders of “Indie” businesses will have to determine if Reg A+ is appropriate for their particular company. What is clear, however, is that having another fundraising option in the toolkit is good news for companies with an independent mindset.