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Chapters:
- Cost of getting your Reg A+ accepted (Qualified) by the SEC
- Capital raising costs after going live with your Reg A+ offering
- Marketing expenses and marketing techniques
- Reg A+ timeline/schedule
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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Realistically, if you assume a simple audit, then the total costs of getting yourself to the point that you are qualified by the s e c is gonna be about $150,000 or more, maybe a little bit less if you've got a sweetheart deal with the securities attorney, but take that number as being a reasonable estimate of what it costs to get qualified.
Assuming you're not doing something heinously weirdly different or a crypto offering, because crypto offering may never get qualified by the S E C. But for companies that are doing straightforward things then the likelihood is that it's gonna cost about 150 K to get through the journey with a simple audit. If the, if the company has messy financials to go back for more than two years, then it's gonna cost you a lot to get the audit done, to get your financials in order. And that's a, you know, hugely variable number, right? But that's a good guide, a good guide to you as to the front loaded costs. And then to raise money once you've gone live, and I'll get into the timing in a moment to raise money once you've gone live, then you are using advertising instruments and email and so forth to solicit.
And if you have customers, then you're able to insert the opportunity to become an investor on your website. And if you have online transactions, and every one of those is an opportunity to invite your customers to become investors. So you could do by, by leveraging your existing business online, that is basically free, right? And that marketing expense is almost free. And the biggest expense in these online raises is marketing by far the most significant expenses, the is marketing. So when we come to the total cost of doing a reggae plus, the least expensive that I'm aware of is about 3%. And that was really no marketing from a company. And this is my estimate, not their number, they haven't given me a number, but, but based on my discussions with the company, Vid Angel raised 10 million in 12 days live to investors. They did that by emailing their 30,000 happiest customers.
And they were an, our consumer facing company. There, they raised this money a few years ago. They had to break the raise for a few, for a couple of weeks to sort out a logistics problem. But the total time alive to raise money was about 12 days. And they raised 10 million in that time, again, because it was such a small number, because they didn't have to advertise, they didn't do advertising then, you know, I would say if you are raising enough money that the fixed costs get, get measured out over a large enough raise, so say $15 million an up, then the total costs of your reggae plus including everything, if you are prudent, of course you can spend too much. You can bring in broker dealers that you overcompensate you can, you can bring a company through Reggae Plus that isn't ever gonna be successful because of the nature of what it does. And I'll get into that in a little bit. But if you're doing a comp, if you're raising money for a company that has the right kind of appeal where Reggae Plus is a good instrument to use, then I would say 10, 12%, maybe 14% total cost is reasonable. Assuming that you're not, you know, going overboard in places you shouldn't go overboard.
You're raising money usually over a year. If you, if you rush to raise the money quickly, it's gonna cost you a lot. The marketing expense will go we'll skyrocket. Obviously there are exceptions to that. If you've taken lots and lots of non-binding investment reservations, we have a client company that is doing so and has, has, has had great success, has more than 25 million of reservations at this point after to small two months or two and a half months taking reservations. That conversion process will be rapid to the extent that people do convert. That'll be a rapid process, obviously. But otherwise, when you are advertising, when you are drawing in investors through advertising spend and you try to rush it, it's gonna cost you a lot of money because the advertising vehicles they don't give you volume discounts that do the reverse. They raise the price when they see you spending more.
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