Uncategorized

The Reg A+ Market

Screen Shot 2016-10-12 at 2.25.21 PMA recent report from NextGen Crowdfunding reviewed all of the Reg A+ offerings filed from June 2015 – June 2016. Reg A+ allows startups to raise up to $50 million from both accredited and non-accredited investors through investments via an online investing portal. The investments made by investors can be as little as a few hundred dollars.

NextGen analyzed 131 companies that have taken advantage of updated rules established by the JOBS Act of 2012. Some of the key takeaways from the report as reported by Crowdfund Insider include:

  • The number of individual companies filing under Reg A+ totaled 131 – 13 of the 144 filings were duplicates. Of these, 129 of them are U.S. companies and two are from Canada.
  • Reg A+ companies span various industries, including finance and real estate (48 companies, which is 36.6% of the filings), services (30 companies, 22.9%) and manufacturing (23 companies, 17.5%)
  • Many more mature companies are participating in Reg A+; the oldest firm has been operating for 37 years and 22 of the 131 firms have been in business for 10 years or longer
  • Many Reg A+ filings are coming from the largest states around the country, including California (34 firms), New York (9 firms), Illinois (7 firms), Florida (14 firms), and Texas (7 firms) – with little participation from firms in the Southern states (16 firms in total from the region)
  • 54 companies filed under Tier 1, which allows them to raise up to $20 million
  • 77 companies filed under Tier 2, which allows them to raise up to $50 million but requires a financial audit
  • 79 of the 131 companies reported no revenue and were early stage firms

One of our previous blog posts can walk you through the steps to determine whether or not a Reg A+ offering might be right for your company.

Should you determine that a Reg A+ offering is the right route; Seed Equity can assist with your capital raising needs starting with the company’s offering materials, the eventual closing, and everything in between. We make sure that the Reg. A+ offering is compliant with all the applicable regulatory requirements.

Seed Equity’s online investing platform was created to make capital raising seamless. We help manage the process so that you can do what you do best: grow your business. The Seed Equity platform is able to do everything online for investors. We enable document execution, verify investor identities, suitability testing, investor communication, perform anti-money-laundering checks and provide an escrow account to easily track the transfer of funds.

 What You Get with Seed Equity

  • Online Investing Platform– Seed Equity makes it easy and seamless for your customer base to invest. Our engineering team will work closely with your team to make sure the process is as painless as possible.
  • Communications Portal– You can communicate with all of your investors through our communications portal.
  • Suitability– Seed Equity performs suitability on all investors in compliance with FINRA Rule 2111. Investor’s investment profile including the investor’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs and risk tolerance and others.
  • AML – Instant Identification Verification. Complies with Section 326 of the USA Patriot Act. All Investors are checked against a comprehensive set of global terrorist watch lists, including the Office of Foreign Assets Control (OFAC), Politically Exposed Persons (PEP) and others:
  • BES: Bank of England Sanctions
  • CFTC: Commodity and Futures Trading Commission
  • DTC: Defect Trade Controls
  • EUDT: European Union Designated Terrorist Groups + Individuals
  • FBI: FBI Fugitives
  • FCEN: Financial Criminals Enforcement Network Special Alert List
  • FAR: Foreign Agents Registration Act
  • IMW: Interpol Most Wanted
  • OCC: Office of the Comptroller of the Currency Alerts
  • OSFI: OSFI – Canada Entities
  • SDT: State Department Foreign Terrorist Organizations
  • BIS: US Bureau of Industry and Security
  • UNNT: United Nations Named Terrorists
  • WBIF: World Bank Ineligible Firms

Instant Verification includes identity verification and instantly authenticates businesses and individuals.

  • Bank Level Security– All information is sent securely using bank-level SSL encryption.
  • Escrow Account – Set up and Management

 Investor funding Options include:

  • Checks
  • Wires
  • Secure Data Room– Bank level security for offering documents and financials stored securely in an SSAE-16 (SOC 2) certified, FINRA compliant document storage system.
  • In House Legal Counsel to assist with SEC Filings– Seed Equity has qualified compliance and in-house counsel that are familiar with Reg. A+ and you will have full access to them at any time. At the option of the company, Seed Equity will help with drafting Form 1-A and will assist in resolving any issues that are brought to our attention by the regulators. Seed Equity can be as involved as you would and your counsel would like.
  • Transfer Agent – Establish account with SEC Registered Transfer Agent. Coordinate shareholder list from Escrow agent to Transfer Agents records.
  • FINRA Member – Seed Equity is a member of Financial Industry Regulatory Authority (FINRA), the largest nongovernmental regulator for all securities firms doing businessin the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 172,000 branch offices, and more than 676,000 registered securities representatives. Created in July 2007 through the consolidation of NASD and the member regulation, enforcement, and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. For more information on FINRA, visit finra.org.