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Chapters:
- Reg A+ is less costly than a conventional S-1 IPO - also less time-consuming
- Flexibility - Reg A+ allows you to change the valuation during the offering
- Offering timeline and Audit requirements
- Reg A+ insider liquidity
- Marketing - Reaching new investors and leveraging your customers and fans to decrease marketing costs
- Series Reg A+ offerings
- Flexibility with the raise amount, maintain control over your company
- You can use the offering proceeds to fund the costs of the capital raise
Disclaimer:
The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.
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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 key 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
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.
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Advantage is a Regulation A+. I'm gonna focus on the less obvious ones. Some of these are very obvious, you know, having liquidity, which I'll get into later is, is obviously a good thing. So it's very flexible compared to many other types of offerings because you can literally go live with your Regulation A+ and change the share price, change the valuation of your company as you go, and you within reason and obviously all of these things involve a process. But nevertheless, the ability to change the valuation as you go, it's very helpful. Cause many companies, the maximum for Regulation A+ is 75 million per year. But you might file for up to 75 million, but you might only want to raise or need to raise 15 million. That might be sufficient and you'd love to raise more if the, if the process of the raise is going, going well enough.
But you actually really, really doing this to raise 15 million. So if you establish a valuation that's consistent with that 15 million raise and then have a great, a great deal of success and want to raise more, you can raise the valuation to manage dilution as you go. That's helpful. And it also rewards the the earlier investors for taking what is a bigger risk. You know, somebody who invests in the first week that a Regulation A+ offering is live is taking a bigger risk than someone who waits until the last week when the companies raise a large amount of money it's less costly than an S-1 IPO than the conventional IPO and it's also less time consuming. So the, the amount of comments back from the SEC reduced the SEC seems to like Regulation A+, we've had I think four of our customers get qualified in about a week or 12 days, 12 business days from filing when the SEC actually ex states going in that you should expect two one month cycles where they'll have questions for you.
And the speed at which you respond to each of those questions will determine how quickly you can be qualified. So getting through the SEC process in about two months is quite reasonable for uncontroversial well-prepared offerings and much faster in some cases. And having the ability to use a US Gap audit instead of PCA or B is a nice advantage compared to a conventional IPO. And again, the SEC considers this a public offering and we'll get into the listing options later. Up to 30% of the raise in a Regulation A+ can be selling insiders, be that founder members or old investors or relatively recent investors if they've exceeded their rule 144A period, which is typically six months. I mentioned marketing is allowed, some companies lend themselves, and that's where I think AI machine learning chatGPTkind of businesses can really do well, which I'll get into in a moment.
But the fact that you are allowed to market and that you can include marketing in your business on a daily basis you can insert in invitations for customers and partners to invest in in the transactions that, that are occurring every day on your website. Very advantageous because it can really significantly reduce expense. The liquidity of options. I've mentioned that I'll get into that more. And the fact if you have customers, if you have fans, if you have transactions as I mentioned, being able to leverage that cost effectively, that drastically reduces the cost of marketing. And there are many new business types that can exist now that didn't exist before. I've done another webinar on the last prior webinar to this one, focused on series offerings for companies that are doing collectibles. For example, collectible cars, collectible jewelry, art, things of that type, unusual investment assets that regular folks haven't had access to before can be offered in a Regulation A+ series offering where you might have 50 or 60 or 70 different subclasses of stock within one reg A plus where the price is determined by the value of the asset and the asset trends according to the interest in it. But for example, art, that's that category exists now and is doing very nicely and it just couldn't have come to pass without Regulation A+. So innovative new options that you didn't have before.
I mentioned the flexible raise amount that you can finish it early that you maintain control of your company when you are raising money from private equity or venture capital sources. Entrepreneurs do run the risk that they'll be booted or maneuvered out of their own company. So rate, having control over the raise is another advantage. And many people tend to think that if you are raising money that and you want to raise 40 million, for example, that you have to raise all 40 million before you can draw down from the proceeds that have been deposited into escrow. That is not the case. If you, if you, if you describe and position you are offering as, as to grow the company and you define the SEC, what the use of proceeds and to investors, what the use of proceeds will be in a smaller raise, then the SEC allows you to raise smaller amounts and to conduct escrow closes from the beginning so that that ability also to include in the filing that you will use proceeds from the raise to fund the ongoing marketing and other expenses of the raise is a big advantage.
So from a cash flow standpoint, that's a lot more attractive. If you are buying an asset and you're buying a business or a building and that's 20 million, well obviously you have to raise 20 million before you can sensibly deploy that money. In that case you start funding all the expenses. But that's the very, very few companies take that approach with Regulation A+. But that's obviously the case for an asset acquisition. I mentioned 75 million a year. You can use Regulation A+ for a secondary offering less expensive than using S3 or public companies.
THIS TEXT TRANSCRIPT HAS ERRORS IN IT THAT WERE CAUSED BY THE SPEECH TO TEXT CONVERSION SOFTWARE WE USED. DO NOT DEPEND ON THE TEXT TO BE ACCURATE. WATCH THE RELEVANT PARTS OF THE VIDEO TO MAKE SURE YOU ARE PROPERLY INFORMED. DO NOT DEPEND ON THIS TEXT TRANSCRIPTION TO BE ACCURATE OR REFLECTIVE OF THE STATEMENTS OR INTENT OF THE PRESENTERS.
