If you’ve gotten this far, you’re like most other savvy Americans asking “what is Regulation A+?”
Even though you may not have heard about it before, Regulation A (also known as Reg A) has been around since the 1930s. However, it has become a much more popular option for companies raising capital since 2015. Under the JOBS Act (Jumpstart our Business Startups), companies were given an easier way to access capital. And the general population was given an opportunity to invest in promising startups!
Reg A+ investments have surpassed $2.5 Billion since 2015, which is when people started referring to Regulation A as “Regulation A+”. The main differences that have made it more approachable:
- Companies can raise up to $75 Million in a year
- Under Tier 2, companies do not need to have their offerings reviewed by the regulators in every state
- Non-accredited investors (i.e. anyone) can invest up to 10% of their income or net assets (whichever number is greater) annually
Companies still need to provide the proper forms to the SEC and/or on a state level, depending on the tier they’re using. That’s good news for potential investors, because it means that these companies have to comply with the disclosure requirements of the Securities and Exchange Commission before they can accept investments. It’s just an easier process than some other funding categories. For instance, the paperwork and process of going public (being listed on the stock exchange) is a much more arduous process.
If you invest in a company via Reg A+, it’s also good to know how that process works. Here are a few things to note:
- Make sure to review the offering circular, or check out the company’s 1A form (filed with the SEC). These provide valuable information on the company’s history and performance.
- If the company doesn’t succeed or grow as planned, you can lose your entire investment.
- Shares under Reg A+ don’t always have the best options for trading. Make sure you review these to understand what the liquidity of your investment would be.
At the end of the day, Reg A+ has the potential be be a great opportunity: both for investors and for companies issuing securities. Some of the main reasons our audience invests:
- Anyone can invest
- Choose the companies you believe in and want to win
- Put your money into a sector you support and want to succeed