In just the last few years, equity crowdfunding has completely revolutionized the capital markets.
Thanks to sweeping changes brought on by the JOBS act, new crowdfunding regulations now allow anyone – regardless of net worth or income – to invest in the private online offerings of small and growing companies.
For startups, Regulation Crowdfunding (Reg CF) is a securities offering that allows issuers to raise up to $1,070,000 from retail investors every 12 months through equity crowdfunding.
But for mid-stage companies that are past the startup phase and are seeking to raise larger sums, recently implemented modifications to the Regulation A exemption (known as Regulation A-plus or Reg A+) has opened the door for companies to raise up to $50 million from retail investors every year.
Reg A+ has quickly become one of the most popular ways for established, mid-stage, and pre-IPO companies to raise funds from prospective investors. Companies that have already gained significant traction and are looking to accelerate their growth to reach the next stage of their development, often choose Reg A+ over Reg CF for their funding needs.
However, one of the problems that has arisen in the crowdfunding space is the lack of a venture capital investment platform that is strictly dedicated to these types of capital raises.
Equifund Ventures is our newly launched equity crowdfunding portal that specializes in Reg A+ offerings and is designed specifically to help mid-stage companies obtain funding from investors that are seeking to bypass the startup phase of the company life cycle.
For decades, countless rules and regulations made raising money through capital markets prohibitively expensive and difficult – especially for smaller companies.
But on June 19, 2015, Title IV of the Jobs Act came into effect and provided amendments to the old and rarely used Regulation A exemption – an old regulation that only allowed issuers to raise a maximum of $5 million per year selling securities exempt from registration.
The newly amended regulations, known as Regulation A-plus (or Reg A+), allows companies to raise up to $50 million every 12 months through equity crowdfunding.
Reg A+ is often referred to as a “mini-initial public offering” or “mini-IPO” because all investors – including accredited investors and the general public – are allowed to participate in these financings.
Broken up into two tiers (Tier I and Tier II), each with their own separate rules and regulations, Reg A+ offerings allow companies to raise capital faster, and less expensively than a traditional registered IPO.
Furthermore, the process is streamlined and the ongoing disclosure requirements are much less burdensome. With Reg A+, companies are no longer forced to hire armies of attorneys to tackle mountains of paperwork.
There are also no general solicitation restrictions so companies can publicly advertise their offerings to investors anywhere.
Unlike the Reg CF exemption, which is largely meant for newer businesses trying to prove a concept or gain early traction, the Reg A+ exemption has quickly become the go-to option for successful mid-stage companies, and other low-risk, high-upside issuers – companies that are more established and are looking for capital to accelerate their growth or are seeking an early or partial exit.
Generally, these companies have previously raised a significant amount of capital, boast a large, active user base, have a large marketing budget in place, and are looking to raise between $3 million to $50 million through a leading equity crowdfunding portal (such as Equifund Ventures).
Equifund Ventures is a state-of-the-art investment platform that helps companies raise equity-based capital at a lower cost than a traditional IPO. Issuers also gain exposure to our broad community of investors that can offer real-time feedback on products, services and strategic decisions.
In addition, our experienced and dedicated team assists companies in navigating through the regulatory approval process – making a Reg A+ offering on Equifund Ventures the ideal preparation for listing on any major exchange.
For a more in depth explanation of Reg A+ and to see if it’s the right financing option for your company, please visit our FAQ section here.
Investing in startups at the earliest stages of the company life cycle can be daunting for even the most seasoned investors. Not only are the risks high, but the returns are also never guaranteed.
But what if there was a way to invest in more established private companies that simply needed a boost to accelerate their growth?
What if you could become your own venture capitalist by building a strong portfolio of companies with real assets, cash flow, and income?
What if there was a way to bypass the early stages of the company life cycle and jump straight into pre-IPO phase – right before a company lists its shares publicly on a national exchange?
The signing of the JOBS act has opened up an exciting new opportunity for investors to participate in equity crowdfunding opportunities for the very first time and Equifund Ventures has created a highly targeted venture capital investment platform designed specifically for companies and investors to take advantage of the new Reg A+ exemption.
Our members have exclusive access to highly-curated, growth-ready, private companies with established management teams and proven track records – before their shares become publicly-traded on a national exchange.
Furthermore, our deal flow provides investors with equity crowdfunding opportunities across a wide range of sectors and industries and at the same terms as leading venture capitalists.
However, there are several key features of Reg A+ offerings that investors should be aware of.
For example, depending on which tier (Tier I or Tier II) the offering is under, there may be investment limits placed on investors. Also, depending on the Tier, issuers may or may not be required to provide audited financial statements.
It’s also important to understand the differences between Tier I and Tier II when it comes to state preemption rules. Under Tier I, companies are required to register their offering in each state where they intend to sell their securities. This means that only investors in states where the securities have been registered may participate in the offerings.
Under Tier II, Reg A+ preempts state laws by removing the need to satisfy state registration requirements and allows for residents of any state to participate in the offerings. Not surprisingly, Tier II is the preferred tier for small and growing businesses.
Finally, potential investors should also be aware that securities issued under a Reg A+ offering are unrestricted and freely transferable. This means that after an offering is closed, shares are immediately available for secondary trading.
For a more in depth explanation of how the Reg A+ exemption works for investors, please visit our FAQ section here.
Equifund Ventures Specializes In Regulation A+ Offerings
Equifund Ventures is a highly specialized equity crowdfunding portal that connects mid-stage, pre-IPO issuers with investors looking to become their own venture capitalists.
Our experienced and dedicated team has a deep understanding of the ins and outs of Reg A+ offerings and have made our platform as simple, straightforward, and seamless as possible for both companies seeking capital to accelerate their growth and investors looking to invest in ready-to-grow, proven companies before they go public.
Equifund Ventures is the first FINRA-registered crowdfunding portal to be based in Canada, with access to the full North American market.
Whether you’re are a company or an investor that’s interested in Equifund Ventures, we invite you to join our growing community today.
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