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Regulation A+

Short-Term Gain = Long-Term Pain?

Building a Sustainable Public Company with Longer-Term Investors

Much attention has focused on recent Reg A deals (Arcimoto, Shiftpixy, Chicken Soup for the Soul Entertainment, Myomo and Adomani) that have listed on national exchanges (Nasdaq and NYSE). But the question remains, is this the right move for small-caps seeking to become public companies through innovative capital raising frameworks?  After the excitement of ringing a bell has worn off, the visibility has dissipated, the bankers have been paid and the festivities come to a close, a bigger challenge begins for management to grow the value of their business while balancing the resource-intensive requirements of maintaining a listing on a national exchange.

Reg A was designed for small companies, start-ups, entrepreneurial innovators and those seeking to alleviate the cost, time and complexity associated with the traditional IPO process.  Part of the larger JOBS Act story, this legislation increased opportunities for transparent and online capital raising whereby small cap companies could embrace technology and the internet to improve sourcing of, and access to capital, ultimately allowing more individual investors to participate. Continue reading “Short-Term Gain = Long-Term Pain?”

Is Regulation A+ an Initial Public Offering – IPO?

By Rod Turner | Manhattan Street Capital, Inc.

This is not a traditional IPO. While you are allowed to use a Reg A+ offering to take your company public and list it on the NASDAQ or the NYSE, that is not a requirement, and it is not the path most companies will take because the reporting costs from being public on the big boards are very high.  An advantage of using Regulation A+ to take your company public to the NASDAQ or NYSE is that you can set a zero minimum for the Reg A+ itself and then if you do not meet the minimum listing capital raise for the NASDAQ or NYSE you can still complete the raise and get the capital. Then the option to uplist exists for a later date.

A more cost effective route is to list your company on the OTCQB, or the OTCQX; see below for more on this. Some companies are taking this route with a plan to uplist when they are more established. Continue reading “Is Regulation A+ an Initial Public Offering – IPO?”

Think an IPO is the only way to access the Public Markets?

The high cost to complete an IPO onto a U.S. stock exchange – on average $2.5 million*, combined with the declining bank appetite for small-cap IPOs, is forcing many small companies to stay private longer. However, the public markets offer tremendous benefits for small-cap companies seeking to raise capital and grow their businesses. Fortunately, an IPO isn’t the only method for small companies to gain the benefits of a public market.

In our second whitepaper with IR Magazine, on Small-Cap company issues, we focus on three alternatives to the traditional IPO: Continue reading “Think an IPO is the only way to access the Public Markets?”

Don’t Look Now: You’re Public

Recently, at a Crowdfunding conference in L.A., I met with three company CEOs all in the process of doing Reg A+ deals.  When I asked them about their plans for secondary trading, I was surprised by the answer.  All three responded with some variation of “we don’t plan on going public – we will just issue the shares, there won’t be a market.”  Upon returning home I found another company advertising in GQ magazine offering shares for their Reg A+ deal.  In the Risks and Disclosure section of their Reg. A+ materials I came upon this statement: Continue reading “Don’t Look Now: You’re Public”

6 Key Takeaways from Our Reg A+ Bootcamp

OTC Markets Group recently held a Regulation A+ Bootcamp at our OTC Market Center in Manhattan to educate public and private companies about how to do a successful Reg A+ offering and go public under the Jumpstart Our Business Startups Act (JOBS Act).

Speakers included the team behind Elio Motors’ Reg A+ offering – Ron Miller of StartEngine Crowdfunding, Inc., Darren Marble of CrowdfundX, Scott Purcell of FundAmerica, LLC, and Seth Farbman and Yoel Goldfeder of VStock Transfer, LLC – as well as other crowdfunding industry experts who discussed everything from the current state of the Reg A+ market to how to crowdfund an offering to legal and accounting considerations, the escrow process, selecting a transfer agent and making shares tradable in a public market. Continue reading “6 Key Takeaways from Our Reg A+ Bootcamp”

The Road Not (Yet) Taken

As part of the JOBS Act, Congress and the SEC updated and expanded Regulation A (Reg. A) to reduce some of the road blocks to capital formation faced by startups and emerging growth companies.  Many have argued that regulations implemented over the past two decades have removed the economic incentives for broker-dealers to engage in smaller offerings.  In many cases, the prohibitively high costs associated with being public have also left smaller companies unable or unwilling to look at the public markets.  The amendments to Reg. A not only lower the hurdles in securities offerings, but allow for flexibility when structuring transactions – bridging the gap that existed between private and public offerings, thus reducing the cost and complexity of being public.  Diverging from prevailing discussions around online capital raising and equity crowdfunding, below is a look at some of the more practical applications of Reg. A. Continue reading “The Road Not (Yet) Taken”

Regulation A+ Thoughts and Insights

In June 2015, the SEC adopted amendments to Regulation A (“Reg. A+”), easing the burdens emerging and growth companies face in raising capital. With all of the recent excitement surrounding Reg. A+, we wanted to share some thoughts and what we’re noticing in these early stages. Continue reading “Regulation A+ Thoughts and Insights”

How Warm is the Water?

At its core, raising capital is about building relationships.  Companies seek investors who clearly understand their stories, want to help them achieve their objectives and believe in their investment potential.  Thus, companies may want to view Testing the Waters (“TTW”) in a broader context than just “how much can I raise?” TTW can be a part of a company’s overall investor relations strategy.  It’s the courtship before marriage.   Continue reading “How Warm is the Water?”

Swipe Left or Swipe Right – Finding the Right Partner Online

General solicitation, crowdfunding, and testing the waters have fundamentally changed the public offering process. Raising capital online is emerging as an exciting, innovative new way for companies to access capital directly from investors. While technology and the internet have transformed the way we shop and access goods and services over the past two decades, it’s only in recent months that companies are able to market themselves and solicit interest on the web when selling their stock. Continue reading “Swipe Left or Swipe Right – Finding the Right Partner Online”

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