After a company has decided to pursue a mini-IPO, they will need to draft a Form 1-A with the help of SeedInvest and obtain reviewed or audited financials. After filing the Form 1-A, SeedInvest will work with the company to respond to any comments from the regulators and then file the final offering circular after receiving the final go-ahead from the SEC.
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How it Works
Raise up to $75M under Regulation A+
Learn about Regulation A+ (Reg A) and how it works for companies.
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What is Reg A?
Regulation A+ is a type of offering which allows private companies to raise up to $75 million in a 12-month period, from both accredited and non-accredited investors.
For the last 80 years, private companies could only raise capital from accredited investors, the wealthiest 2% of Americans. In April 2012, President Obama signed a landmark piece of legislation called The Jumpstart Our Business Startups (JOBS) Act, allowing entrepreneurs to publicly advertise their capital raises. In June 2015, Title IV of the JOBS Act (Reg A+) went into effect, enabling private early-stage companies to raise money from the general public.
Restrictions around promoting or marketing a securities offering under Reg A+ are tighter than under the other exemptions, but the SeedInvest team is very experienced in navigating the complexities of raising a large round online and can help your company ensure regulatory compliance of your offerings every step of the way.
Despite its more onerous requirements and associated costs, Reg A+ allows you to raise VC-level sums of capital from a large and spread out pool of angel investors, without surrendering nearly as much control over your company.
Who is a good fit?
Reg A+ is best suited to growth stage companies that have proven product market fit and traction.
- Companies looking to raise between $5 - $75 million
- Consumer-facing companies with clear value propositions
- Companies with large & engaged users bases
- Companies wanting to keep strategic control
- Companies wanting to build large-scale publicity and brand awareness
Benefits of Reg A+
Public Raise
Startups can now raise money from anyone under Reg A+ and turn their customers into investors without loosing strategic control over their company.
Higher Limits
Reg A+ allows private companies to raise up to $75 million from the public after filing with and getting qualification from the SEC.
Mini-IPO
The costs associated with a Reg A+ offering are much lower than a traditional IPO and the ongoing disclosure requirements are much less burdensome.
Step 1
Preparing the Reg A offering
Once a company decides to pursue a Mini-IPO, SeedInvest will work with them to get regulatory qualification. This process involves drafting offering documents and receiving the go-ahead from the SEC.
The company and SeedInvest will keep you updated on the progress of the offering. You should use this time to learn more about investing in private companies and to familiarize yourself with the SeedInvest platform. The SeedInvest blog is a valuable source of articles and information about investing in private companies.
Step 2
Launching the raise
Once regulatory qualification has been received, the company may launch its mini-IPO. SeedInvest's online platform has been engineered to seamlessly accept investments online, including verifying investor identities, performing anti-money-laundering checks on investors, facilitating investment document execution, funds transfer and regulatory compliance.
Throughout the Reg A+ offering, SeedInvest will work in tandem with the company to effectively market the campaign, manage investor relations, and facilitate online investments at sale. SeedInvest will work with the company to market its fundraise by employing a three-tiered strategy to promote the round to and accept investments from:
- The company's customers and the SeedInvest investor network to build initial momentum and excitement.
- The early-adopters, the company's extended network and affinity groups.
- The public through robust press, advertising, and digital campaigns.
The company's SeedInvest profile presents comprehensive information about the company to let potential investors make an informative investment decision. Potential investors should read this information carefully. The SeedInvest platform allows investors to confirm their identity, sign legal documents, and transfer funds online.
Step 3
Closing the round
SeedInvest will manage the entire closing process and ensure that all legal and regulatory obligations are met. The funds from the investors will be transferred to the company upon completion of the offering. Additionally, the platform provides messaging and managing tools for the company and investors to collaborate online before and after closing the round.
