Reg A+ or Mini IPO – What Is It and Who Is It Right For?

By: Fay Matsukage

For many businesses, raising the money needed to grow or expand can be very difficult. While there are quite a few options out there, they all come with various advantages and disadvantages, and sometimes none of them really meet your needs. For companies that need to raise a significant amount of money, but aren’t looking to do a traditional IPO due to the complexities and costs, a Reg A+ or Mini IPO may be just the solution.

What is a Reg A+/Mini IPO

A Regulation A+, also known as a Mini IPO, is an expansion of the previous Regulation A option that was issued by the SEC under Title IV of the Jumpstart Our Business Startups (“JOBS”) Act of 2012. The original Reg A option allowed companies to raise up to $5 million through accredited and non-accredited investors in a 12-month period. Using this option still required registration with the SEC, but the requirements were far easier and less costly to comply with.

With the Reg A+ option, there are two tiers available, each with different requirements and options. Tier 1 allows a company to raise up to $20 million in a 12-month period, and the company must qualify or register the offering by complying with filing and other requirements in every state where they offer shares. The filing must be in line with the requirements of each individual state. Such qualification or registration is not automatic – those states then determine whether their requirements have been met. Tier 2 allows a company to raise between $20 and $50 million in a 12-month period. In this case, the company just files a notice with each state in which it plans to offer shares, but non-accredited investors are only permitted to invest up to 10% of their annual income or net worth, whichever is greater.

Which Companies can Benefit from The Reg A+?

Any company that is ready to raise a significant amount of money without doing a traditional IPO will find that this is one of the best options out there today. Even companies who aren’t 100% sure that there will be sufficient interest in investing can use the Reg A+ option to “test the waters” of interest. Reg A+ allows you to begin fundraising (without actually gathering the funds) to see how much interest there is. If you gain enough interest, you can complete the Reg A+ paperwork and immediately collect on the investment promises. This is clearly one of the most flexible and easiest ways for a business to gain the financial investments needed to grow and expand effectively.

We’re Here to Help

While the Reg A+ or Mini-IPO options are far easier than a traditional IPO, registering with the SEC is still a process that needs to be handled correctly. Doida Law Group has been helping clients with this type of fundraising for some time, and we would be honored to be there with you throughout this important process. Contact us to set up a consultation with an attorney who can help you with everything you need.

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