Rod Turner October 2016
October Reg A+ Update: Regulation A+
The SEC qualified 12 Companies this month. Seventy-four companies have now been Qualified, with a total of $1.6 Bill of capital intent to raise. Ten companies are currently TestingTheWaters(TM), eight companies are live and accepting investments. We estimate that eleven companies have succeeded in raising more than their SEC Qualified minimum capital raise to date, meaning that their offerings have become effective.
Real Estate continues to lead:
We are seeing more signs that Real Estate offerings are taking the early lead in Regulation A+. Real Estate is an allowed type of investment asset for Reg A+ offerings. Consumers already understand real Estate as an investment is helping, as has already been shown in the Title II/Reg D field. Regulation A+ is broadening the appeal of real Estate to non-accredited investors worldwide.
RealtyMogul has followed Fundrise's lead and launched their first Regulation A+ offering, called MogulREIT. This investment allows non-accredited investors access to commercial real estate investments - and may raise $50 million. RealtyMogul claims to be democratizing Real Estate investing. Previously the company only accepted accredited investors. RealtyMogul is reported to have raised $200 million online for real estate transactions to date, utilizing Reg D.
MogulREIT has a minimum of $2500 per investor, which the firm intends will provide access to a diversified portfolio of real estate. Property assets will include retail, office, and condominiums. According to the firm, traditional non-traded REITs charge front-loaded sales commissions of 7 percent and total expenses as high as 15%. The company intends to offer investors direct online access with zero sales commission and offering expenses of 3 percent.
Generation Income, the first mover to use Regulation A+ for real Estate, announced on October 5th that they had raised $6 mill to date in their Reg A+ (Offering Circular here).
Consumer appeal is a must at this stage:
Across the board in Regulation A plus, we see more established and more suitable companies engaging with Reg A+. The biggest challenge tends to be that it is essential at this early stage for companies to generate robust consumer engagement so that consumers will invest their hard-earned capital. Some business-to-business companies can achieve this, and more consumer-facing businesses offer this potential, of course. Broker-Dealer syndicates will not add much value until offerings have first shown success with consumers making retail investments. Building strong consumer momentum also requires excellence in marketing and careful project management from 360-degree marketing firms.
See the September Regulation A+ Update for more on e-REITs from Fundraise and GroundFloor.
Click here for guidance on how to make your companies' Reg A+ offering a success.
For further details and context on the status of Reg A+, check our prior Reg A+ Updates.
Regulation A+ recap:
In June 2015, Title IV of the JOBS Act opened the door for main street (non-accredited) investors worldwide to invest in private companies having headquarters in the USA or Canada. Regulation A+ funding offers cost-effective capital raising for mid-stage companies and mature startups and provides investors convenient access to company offerings at their issue price. Also advantageous: the shares are liquid post offering—summary of Reg A+ here.
Also, check the Manhattan Street Capital FAQ.
Please note that estimation and interpolation are required in compiling this update, especially for confidential filings. We do our best to interpret the information that is available in the most informative manner. To update us on your companies' Reg A+ offering progress, email [email protected].
Some information herein is kindly provided by Vintage, a division of PR Newswire.
TestingTheWaters™ and TestTheWaters™are Trademarks of Manhattan Street Capital
Rod Turner
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a vital role in building successful companies, including Symantec/Norton (SYMC), Ashton-Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.
www.ManhattanStreetCapital.com
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