Why Use Reg A+ to Raise Capital?

Six Reg A+ offerings filed with the SEC yesterday, but a total of 181 offerings have filed as of January 31, 2017. The SEC qualified 103, while 28 issuers reported selling $259 million in aggregate using the Reg A+ filing process. As the number of companies using Reg A+ indicates, companies are choosing this option more and more for a number of reasons. We explain a few of them in this blog post.

Earlier this year, we quoted an SEC white paper stating that 147 Regulation A+ offerings filed statements as of October 31, 2016, and were seeking up to $2.6 billion in financing. We also wrote in our blog how in the 16 months since the amendments became effective, Regulation A+ securities offerings had outpaced the past rate of Regulation A activity. Perhaps these three motives are the root cause of its popularity.

1.With Reg A+, companies can still raise capital when planning an IPO to the NASDAQ, but can opt to use Reg A+ mid-stream if the NASDAQ minimum for listing is not reached. Companies will then avoid thousands of dollars wasted on offerings that might have otherwise been prematurely abandoned.

2. One other benefit of using Reg A+ for your IPO is that it allows you to go public directly to the NASDAQ, NYSE, the OTCQB or OTCQX, while venture capitals cannot. It has been reported that venture capital firms are more interested in companies that are more likely to deliver a 100X return in about 6 years, but investors still seem pretty interested in companies that might deliver a lesser return. VC firms therefore completely miss an opportunity to work with a growing market.

3. Companies are also pleased to know that Reg A+ allows them to openly market their company instead of undergoing the usual quiet period. Companies get to promote their brand, thus increasing customer interest and attracting strategic partnerships early on in the process.

As a result, Edgar Agents has started to offer new services to its repertoire, in addition to our core products, that are specific to Reg A+ requirements such as marketing services. We have always offered services that comply with the latest filing requirements and now file all the necessary forms for Regulation A+ mini IPOs as well. We also provide financial printing and newswire capabilities.

Edgar Agents is always happy to discuss your specific filing needs and would like to hear from you today. Call our office at 732-780-5036, visit our website www.edgaragents.com or simply send us a message on any of our social networks: LinkedIn, Twitter and Google+, to discuss your next Reg A+ filing.