Title IV of the JOBS Act, or Reg. A+, went into effect on June 15, 2015 allowing private companies to raise up to $50 Million from the general public, including non-accredited investors. Companies planning to raise capital via Reg. A+ will need to file with the SEC for approval before launching their offering. But, how do you know if raising capital via Reg. A+ is a fit for your startup?
Do you have a large and engaged customer or user base?
Startups that have a large user or customer base can turn those customers into investors. Customers who are enthusiastic about your product or service might be interested in turning that enthusiasm into an investment for equity in your company, allowing them to share in your success. Customers turned investors are also more likely to recommend your company to friends and family over competitors, growing your customer base even larger.
Are you looking to raise between $3-$50 Million?
Raising capital under Reg. A+ isn’t worth the costs associated if you’re looking to raise a smaller round. It can, however, be a very efficient way to raise a large amount of capital quickly if you have an enthusiastic customer base who will be eager to get involved.
Testing the Waters
Before committing to raising capital via Reg. A+, companies are permitted to “test the waters,” by inviting potential investors, including customers, to make an indication of interest in investing in the round. This allows the company to determine the potential success of the offering before moving through the process.
When a company decides to move forward with a Reg. A+ offering, they will need to file a Form 1-A and obtain reviewed or audited financials, respond to any comments from regulators and finally file the final prospectus after being qualified by regulators. Once regulatory qualification has been given, the company can launch their offering. Startups have the option to list their offering on platforms such as Seed Equity Ventures.
Details on Reg. A+ Tier 1 and 2 Offerings:
How Seed Equity Can Help with Your Reg. A+ Capital Raise
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.
- 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:
- 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 The Financial Industry Regulatory Authority (FINRA), the largest nongovernmental regulator for all securities firms doing business in 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 www.finra.org.