Understanding Reg A+: A Guide for Entrepreneurs

Navigating the landscape of capital raising can be complex for entrepreneurs. Regulation A+ (Reg A+) offers a streamlined path for businesses to secure investment without the stringent requirements of traditional public offerings. Here’s a comprehensive guide on the Reg A+ process and its benefits:

What is Reg A+?

Regulation A+ is part of the Jumpstart Our Business Startups (JOBS) Act, designed to help small businesses raise capital. It provides an exemption from the standard registration requirements, making it easier for companies to offer and sell securities to the public. There are two tiers under Reg A+:

• Tier 1: Allows for raising up to $20 million within a 12-month period. This tier does not require audited financial statements and involves less regulatory scrutiny.
• Tier 2: Permits raising up to $75 million within the same timeframe. This tier requires audited financial statements and is subject to more rigorous reporting requirements, but it exempts companies from state-by-state Blue Sky laws.

What is Reg A+?

1. 1. General Solicitation: Unlike other exemptions, Reg A+ allows for general solicitation and advertising. This means companies can publicly promote their offerings through various channels, including social media and other online platforms, to reach a wider audience​.
   2. Less Regulatory Burden: While Tier 2 offerings require more compliance, they still offer a lighter regulatory load compared to a full Initial Public Offering (IPO). The reporting and disclosure requirements are more manageable, making it a feasible option for smaller companies.
   3. Testing the Waters: Companies can “test the waters” before committing fully to the offering. This means gauging investor interest without formally accepting investments, allowing businesses to refine their approach based on real market feedback.

Key Considerations

• Cost and Time: Preparing a Reg A+ offering can be expensive, with costs ranging from $50,000 to $100,000+, depending on the complexity of the offering. The process typically takes several months, involving detailed documentation and SEC qualification​ (Assurely)​.
• Ongoing Reporting: Tier 2 offerings require ongoing semi-annual and annual reports, including financial statements and management discussions. Companies must be prepared for these continuous disclosure obligations​ (StartEngine)​​ (Public Yield Capital)​.

FAQs of Raising Capital via Reg A+

1. What is the difference between Tier 1 and Tier 2 of Reg A+?

• Tier 1 allows raising up to $20 million and does not require audited financials, whereas Tier 2 allows up to $75 million but requires audited financials and ongoing reporting​ (Assurely)​​ (Public Yield Capital)​.

2. How much does it cost to prepare a Reg A+ offering?

• Costs can range from $50,000 to $100,000 or more, including legal, accounting, and marketing expenses necessary to attract investors and comply with regulatory requirements​ (StartEngine)​​ (Assurely)​.

3. What does “testing the waters” mean in Reg A+?

• “Testing the waters” allows companies to solicit investor interest before officially launching their offering, helping gauge potential demand and adjust their strategy accordingly​ (StartEngine)​.

Learn How New Columbia Capital Can Assist You with Reg A+ Offerings

Regulation A+ can be a powerful tool for your business to raise significant capital. At New Columbia Capital, we offer expert guidance to navigate the complexities of Reg A+ offerings. Contact us today to find out how we can support your capital-raising efforts and ensure compliance with all regulatory requirements.