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What is Regulation A+ and How Does it Change Corporate Fundraising?

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Regulation A+ is changing corporate fundraising and providing access to investment opportunities that were otherwise limited to accredited investors. Have you heard of it?  

The U.S. legislation passed the JOBS Act (Jumpstart Our Business Startups) which eases regulations set in place by the Securities and Exchange Commission that “allow non-accredited investors to invest in companies through crowdfunding and ‘mini-IPOs’.” The JOBS Act also expanded Regulation A, often called Reg A+, to allow companies/issuers to offer up to $75 million in stock per year without meeting the long-established requirements.

Access to markets and investing in securities was generally reserved for the wealthy. But with Regulation A, investing is not limited to the traditional crowd anymore; the opportunity is open to everyone — accredited investors and the general public alike — allowing issuers to access a new pool of potential investors. 

According to the SEC’s Regulation A Lookback Study published in 2020, $2.446 billion was raised by 183 Regulation A issuers from 2015 to 2019, proving this exemption is a viable alternative to IPOs. The report revealed that the aggregate amount sought by issuers and amounts raised increased almost threefold during the period studied.

The potential that the Reg A model can offer companies seeking to raise funds is really an untapped market, but the next important question to be addressed is — How can my company reach this broader and more varied source of potential investors?   

This is where Investor Acquisition or IA Marketing comes in. 

Digital marketing firms that specialize in Investor Marketing have the tools and knowledge to build the digital assets that will attract the attention of this broader base of potential retail investors and guide them down the funnel converting from leads to investors.  

According to Joel Steinmetz, COO and Co-Founder of Rialto Markets, a fully-regulated broker-dealer and partner to Uhuru Network, “retail investors bring something different to the table. They operate more like a community. From a branding perspective, you’re turning your customers into investors and your investors into customers.” 

Regulation A is seen as the democratization of investing not only because it opens the opportunity to a larger crowd, but also because it opens the possibility of employing the tools, platforms, and language that most resonate with them. IA firms like Uhuru Network apply techniques to identify ideal investors, segment them into different groups, understand their pain points and interests, and then execute tactics that will not only tell them your story but sell them your stock as well.

IA Marketing is a cost-effective and efficient way for startups seeking to raise funds to make the most of their equity crowdfunding potential and extract the most of what the JOBS act exemptions allow. If your company is considering raising funds, does not want to cede control and equity to VCs, and wants a less expensive and more streamlined process than an IPO, Regulation A+ may be the right path for you. Let’s talk to see how we can help you get there. 

Find out more here!

 

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Written by

Fabian Riofrio

Client Success Specialist

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