Here, we discuss the option of using a Broker-Dealer on your Reg A+. Of course, all investors can invest when you do not have a Broker-Dealer. We can introduce you to an experienced broker-dealer that will get you access to investors for a fee of 1%.
A broker is not needed for you to raise capital from FL residents, and Texas has streamlined its state filing process so you can easily file the needed paperwork and quickly open your Reg A+ to Texas state residents with no broker-dealer expense and no FINRA delays.
There are two ways that you might choose to use a broker-dealer (Using a Broker-Dealer in a Regulation A+ offering is optional).
1) To conduct an underwritten NASDAQ or NYSE IPO via Reg A+. In this case, you can raise capital online to demonstrate that your offering is already a success and then sign up one or more underwriters to raise more capital and list your company. This will incur cash fees upfront and typically an 8% commission on the capital raised by the Underwriters. FINRA approval is required before the underwriters can begin. We at Manhattan Street Capital can introduce you to underwriters who are willing and able to make your IPO happen. How to IPO to the NASDAQ or NYSE via Reg A+.
2) To have a broker raise capital for your offering. In this case, the broker commission will usually be in the 7 to 8% range, plus cash fees upfront. Be careful here because, generally, broker sales reps will not risk their client-investor relationships on an offering that has yet to prove itself a success. They don't want to risk their relationship. Adding a broker-dealer may make sense after you have been raising capital for some months and your capital raise is already a clear winner, if you want to bring in more capital by adding one or more broker-dealers - if their fees cost you less than your advertising cost to attract investors.
An important misperception about broker-dealers is that by signing them up, they will do all the heavy lifting and raise your capital for you. This rarely happens - see item #2 above.
It's extremely unusual for a broker-dealer to do all the needed work to raise your capital - even when they have an 8% commission for doing so. It usually takes a concerted effort and a great deal of marketing and advertising spending to attract enough investors to raise the capital for your offering. Make sure you include this expense in your plan and budget.
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Which Broker-Dealer does Manhattan Street Capital work with?
