As a retail investor, imagine the plethora of opportunities you may reap investing in a startup company that has yet to go public. Being able to get a slice of the pie before big banks and financial institutions capitalize off the markets. Thanks to equity crowdfunding, specifically Regulation A+, you can! Reg A+ can help high-growth potential companies you want to invest in, efficiently raise capital from retail investors. It also creates more opportunities for entrepreneurs and new investors; in turn, attracting investment from a diverse resource pool.
Amended by the JOBS Act, Regulation A+ is an exemption that allows private startup companies to issue shares to the public, without having to register for a public offering with the SEC. It is a great funding method leveraged by private companies looking to raise capital, as it enables a capital raise of up to a threshold of $50 million from both accredited and non-accredited (retail investors). This exemption not only broadens the resource pool startups can raise capital from, but also makes investing much more accessible for retail investors. Investing in a Reg A company enables retail investors to participate in private venture-capital investments.
What is the difference between the traditional Initial Public Offering (IPO) and Regulation A+? Reg A+ can be seen as a “mini-IPO” as it permits the issuance of shares to retail investors. Nonetheless, companies are able to remain private with Reg A+. It also serves as a cost-efficient and simplified version of the IPO, while persisting as a legitimate source of investment. The Reg A+ filing process requires a great deal of approval, including authorization from lawyers, accountants, and broker-dealers. Ultimately, the provided convenience of Reg A+ has become revolutionary to the investing community. It has created a new market for retail investors to seek greater prospects and shareholder stake in their investments. These possibilities for investors, in turn, also allow startup companies to no longer rely on angel and venture capitalists to support their capital funding.
Without a doubt, investing in Regulation A+ startups may be seen as riskier than a traditional IPO, but the greater potential for exponential growth for these is enticing for a reason. The greatest benefit of investing in a Reg A + startup is that it allows anyone, whether you’re an active investor or individual with aligning company visions, to support and grow with these early-stage companies. Become a responsible investor, who invests in a startup that can make a real impact in the world, alongside the opportunity to invest like an accredited investor and with the potential to earn huge returns. If you are ready to share the journey of growth with bright-minded startup entrepreneurs and like-minded investors, investing in a Regulation A+ startup might be a great opportunity for you!
