Use the Chapters list below to select the part of the video you want to watch.
Chapters:
- Disclaimer
- The basics of Reg A+
- Advantages of Reg A+
- How Reg A+ provides Liquidity for founders and investors
- Reg A+ IPO and other Public Listing options
- Regulation A+ Reporting obligation
- Costs of conducting a Reg A+
- Timeline schedule of a Reg A+
- Summary of marketing a Reg A+
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.
MSC is not a law firm, valuation service, underwriter, broker-dealer or Title III crowdfunding portal and we do not engage in any activities requiring any such registration. We do not provide advice on investments. MSC does not structure transactions. Do not interpret any advice from MSC staff as a replacement for advice from service providers in these professions.
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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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So Manhattan Street Capital, then we're advising companies on how to conduct Reg A+ and bringing in all the relevant service providers and staying with you on the journey. We're a boutique, we're selective who we work with, and we add value on the whole journey in all the ways that the regulations allow. We are not a broker dealer deliberately. We do Reg D, Reg S, Rule 144A offerings, which are for institutions and Reg A+ offerings. And again, we host them. We don't have to host them, but that there's a lot of back advantage in that and we advise. We're not underwriters, broker dealers, valuation professionals, securities attorneys and so don't take any of what I say here today to be an attempt to be those things we're not. I'm giving you my take on what Reg A+ is and how it works based on our experience with our clients and, and observing and measuring what happens in in the industry.
Again, we'll be recording this and sending it to all the people that confirmed their attendance to this webinar, and please post your questions in the chat box, which I will then I will then respond to those questions at the end of the prepared remarks. So the agenda, I covered that already. First, what is Reg A+? So it's legal disclaimer. I covered. I, me, Yeah. Okay, well, we'll get there. What is Reg A+? So it's been in, in existence since June of 2015, when there was zero activity at that instant. Now it's an instrument that's being used to raise approximately 4 billion a year in capital. It's become credible. It's a public offering. So unlike many forms of capital raising the S E C considers all investors in a Reg A+ to be liquid. The company itself that's selling its stock is allowed to restrict the sale of those, those securities, but unless they do so, the s SEC says, An investor in a Reg A+ is instantly liquid if they can find a buyer, which isn't to say that you've already listed the security, but as far as the s SEC is concerned, it's liquid Investors of all wealth levels worldwide are allowed to invest.
They only, the maximum they can invest in most Reg A+ is 10% of their annual income or their net worth, whichever is the larger number, unless they're accredited, in which case they can invest an unlimited amount. It's for US companies and also companies headquartered in, in Canada. International companies can set up a US entity and conduct an offering in the US as long as they're not just raising the money here to ship it abroad. They have to do material business in the US you have to market a Reg A+ , unlike an S-1 IPO where you have a quiet period once you file your registration with the SEC, and until you continue raised all of the money, you're not allowed to do any special marketing. It's the precise opposite in a Reg A+ , it's designed to allow companies to market themselves as long as they do it legitimately to raise money online, and it is an online instrument.
To conduct a Reg A+ , each company must file what's called a Form 1-A with the s e c requesting permission, essentially requesting qualification by the S E c conduct. That offering, and that filing is a legal document. It's about 10% the complexity of an S-1 registration. So it's a lot easier burden to prepare. And if the company has existed two years or more, then it's necessary to file with the, to make, with the filing. Two years of US gap level audits must be included. If the company's only existed three months, then you have a three month US Gap audit requirement.
You can, each Reg A+ qualification is a one year journey post from qualification. You have one year to raise the money, you can set up the Reg A+ so that you can continue for three years without stopping as long as you maintain the the necessary management financials and audit reporting obligations that the SEC requires on that journey. So it's good you can go up to three years without stopping if you do it right. Currently. it was difficult to get Reg A+ offerings qualified by the S E C in the past for crypto offerings. Currently, it's about impossible. So bear that in mind. I'll get into particularly suitable places for Reg A+ later. So, advantages of Reg A+, you can raise up two 75 million per 12 month period. So that's a sizable amount of money. You retain control of the company, unlike when you are raising money through private equity or venture capital funding. You provide liquidity through plus to your in insiders, the founders of the company, and to your long standing investors as well as to the new investors.
You can conduct various kinds of public offerings. A Reg A+ is a public offering, but you can list your company on the Nasdaq, on the N Y S E or on the OTC QB or the QX or on a new thing, which is called Alternative Trading System. And I'll explain more about those later, but that flexibility to list your company is good. And it's, if you list on, whilst, if you list on the NASDAQ or the N Y S E, you have a PCA o b order requirement once a quarter. If you list on the other exchanges I mentioned, your annual, your annual audit requirement just once a year is US Gap. So it's a much less onerous financial reporting obligation unless you list on the NASDAQ or on the NYSE, you can already, public companies can conduct secondary offerings via Reg A+ if you choose to list on an alternative trading system.
There are no there's no shorting and there's no naked shorting allowed on those exchanges. So that's a huge advantage. It really means that companies that are not as prepared, not ready for the rigors of being public where naked shorting is allowed on the NASDAQ and the nyse. When I say naked shorting, I don't mean by regular investors, I mean by stock brokers. They're the ones that have the naked shorting ability. So on the OTC markets and on the NASDAQ and nyse that naked shorting, but risk decimate a lot of public companies. But on an alternative trading system, the ability to be liquid and yet not have the risk of a short sales is a big advantage. That's an advantage of Reg A+, you can change the valuation of your offering as, as most of you will know, in many instances, you can't really change the share price and evaluation of your capital raise part way through.
But in a Reg A+, you can. That's a nice thing. You could typically valid, credible companies that are succeeding, raising money in Reg A+ usually will carry a higher valuation. And they would have, if they had raised, if they had raised money from venture capital or Angel investment sources. So much less dilution is a big advantage. And a couple more advantages because we are marketing these offerings online to Main Street investors and because main, it turns out Main Street investors, many of them are optimists and they're investing largely on their smartphones. It's a lot less, it's a lot different dynamic. It's a lot more friendly dynamic as long as we are marketing offerings that appeal to the Main Street investor, and I'll get into that later. So the ability to raise money from a less skeptical audience and to do so easily with being convenient for them and providing democratic access to capital for them is a, is a serious advantage of Regulation A+ because in many instances, they haven't had these chances to, to engage and get involved with companies that they love.
We, we've been doing Reg A+ offerings as an industry since 2015. And during covid, one of the advantages, one of the few advantages of Covid was that people got stuck at home and I had to do other stuff than usual, and they paid attention to online investing. And this online investing category came of age as a result. So we've seen rapid growth in capital formation in the Regulate plus space and institutional investors and accredited investors are paying much more attention depending on the nature of the offering. I'll get into that more later also. So this is essentially, Reg A+ is essentially a simpler, less expensive form of public offering with a lot of flexibility built in.
A lot of companies are, it's, it's easy. It's, it's straightforward to include a transfer agent. Thanks. It's, it's straightforward to include a transfer agent in Reg A+ offerings, which lightens the burden on the company of dealing with so many investors, and I can talk about that later if necessary. But the utilization of a transfer agent makes it convenient to have thousands of investors or hundreds or whatever it might be. And using broker dealers or even underwriters is optional. I'll get into that more later also. And there's a thing called test the waters in Reg A+ where companies are allowed to test market themselves to investors without raising money. So you don't have to do an audit, you don't have to file with the S E C, you do have to conduct the test appropriately, but you are allowed to test market your company to investors to see if it's cost effective to reach them.
And if so, you can. And, and you can also test different messages and different advertising methods to find out which description of your company resonates the best with, with investors. So we offer that as a service. But the point isn't that, the point is that it's nice to be able to test your offering first if you want to do that, if you wanna reduce the risk of it falling on deaf ears. And the s e has expanded that test Water's option to other kinds of offerings as well, since it's been used so successfully in Reg A+. Liquidity. What is the, what is the, what are the options or what are the characteristics of the liquidity which Reg A+ brings to the table? The S E C says that unless the issuing company puts a restriction on the shares are liquid immediately upon purchase. So an investor puts in $3,000 and they, when they're issued their shares, they get a, typically will get access to the transfer agent to an online account. If they have a buyer, they're allowed to sell them. This isn't the same thing as saying you have listed those shares, but they are liquid. It's a big advantage when handled in the right way.
Insider selling up to 30% of the capital raised can be sales of securities by insiders, prior investors and owners of the company. So that's a sizeable, sizeable amount of money. You know, obviously if the 30% of the whole raise is going to insiders and they're all founders selling out, that isn't gonna strike. You know, that isn't gonna give a lot of confidence to investors. So, you know, I don't recommend you jump on that to, to quickly, but the ability to utilize this feature is a good thing. The ability to have selling insiders as a part of the offering where you're not restricted to when, when was the most recent audit, when was the most recent management financials, If it's 30%, 30% of all capital raised this week, next week, next month is distributed to the selling insiders. Another thing that isn't, I think, widely known about Greg a plus is that the, this is a public offering as far as the SEC is concerned.
It's actually a public offering. And as a result, all of the securities in the company become liquid, which is to say the insiders who own those securities are now allowed to sell them as long as they've exceeded their rule 1 44 holding period. So you go, you go pub, you go, you go through the public offering using Reg A+ with one security, but you may have three or four other classes of security that you sold to prior investors, and they are now liquid, which is, again, not to say that you, you are listing those securities, but they are allowed to sell them to anyone. They're not restricted to selling them to wealthy people if they find a buyer. And of course you have the opportunity, once you've listed a security, if you, assuming you've listed it, it makes it easier for anyone to have liquidity.
If you do choose to list, and I'll get into where the listing options are, you'd be more on that kind bit. But the advantage of you can provide a route to convert, Let's say you've listed a class of preferred called preferred C just to pick a random name, and you have preferred A and preferred B investors from, from ancient history. When you list the preferred C security, you aren't, if you are listing it on an alternative trading system or on the OTC QB or the OTC qx, you are not converting everyone over automatically to common so that preferred C is listed. And you could then provide a path to convert your preferred A and preferred p b investors into preferred C owners. So they're, they're liquid, literally in a more convenient manner post offering and, and for that matter during the offering, by really post offering, once you are in a trading situation that you have liquidity in some way, then the insiders are allowed the insiders who are principles of the company and investors that owe more than 10% of the company, they are insiders and the SEC places heavy restrictions on when sales can be made and b and and the amount that of sales that can be made, right?
So it's easier for them to raise money via being a part of this, the raise than it is post raise when listed. Because as in as is the case with companies, all, all companies that in the US that are listed on a trading exchange, the s SEC restricts the ability of insiders to sell to, you know, right after the audits published and things like that. It'll, I'm not gonna get into excessive detail about that, but that's, that's obviously a restriction. You are not required to list your company just because you do a Reg A+. It is not a requirement that you list the company. You can conduct a direct listing to the NASDAQ or the N Y S E via Reg A+ . I'll get into that more later.
So essentially, a company that raises money via Reg A+ has a simplifying process than having conducted an S-1 is subject to less expensive, less onerous reporting obligations than if they had filed an S-1. And, and in comparison, to the cell companies and the, you know, the companies that have been down listed from one of the major exchanges, but that are on one of the minor exchanges, they still have a PCA or B quarterly audit obligation. Whereas your company, if you do a Reg Plus and you arrive and choose the list on the, on the OTC QB or the qx, for example, you only have an annual US gap audit requirement. And on the QB six monthly management financials, which is the same thing that regular plus requires if you're on the qx, then quarterly management financials, but still only a US gap level audit once a year. Listing options then. I touched on a couple of these items. Firstly, you don't have to list the majority of companies that do Reg A+ do not list. Secondly, let's go down the, the stack you can list on an alternative trading system. We, if you go to the Manhattan Street Capital website, you see behind me at the top right corner, there's a search box. And if you type ATS in that search box, then you'll see our content describing alternative trading systems. Anyway, ATS is what I've said, it's a simpler method of listing. It's a new kind of exchange where brokers, stock brokers are allowed to do the extra filings in order to become an ats, an alternative trading system. And there's a large variety of them, probably 30 now that exist. There's too many, as is the case with new things, right? But that will, that'll settle down over time.
You can even get a private labeled ATS that you would use just for your investors in your company. Not to say that that's inexpensive, the way the level of integration that you would use and so forth will make it more expensive. But the point is that ATSs exist and that your, you have the same audit requirements as your Reg A+ already does a US gap audit once a year, six monthly management financials in the main. And once you've raised enough money and have enough liquidity to satisfy their, their requirements and their requirements vary depending which ATS you're talking with, then you can list your sale, your stock there, you still have to file with the states for secondary market resale. So, it's about $10,000 a year cost to do that. And the, I would say different ATS is charged different fee structures, some of them more efficient in trading fees and so forth.
But you can get about a $10,000 listing fee and about $10,000 a year to stay listed on an ats. You can pay more than that of course, but I, I do know there are a number that are doing it around that price. So, the big advantage though, the, the downside of these ATSs is that none of them have huge liquidity and you're not gonna get insanely high valuations. Of course, that's the downside, straightforward and understandable. The upside of though is that unlike on the OTC markets and on NASDAQ and nyse, stock brokerages are not allowed to make naked shorts. So, management is gonna spend a lot less time worried about defending the stock price when you are on an ats. So you are providing liquidity to your investors, and if you're continuing to raise money by a Reg A+ whilst listed on an ats, which is a good thing to do then you are establishing a price in the market by your marketing.
And obviously then it's down to you to deliver with the company, deliver good results, and communicate sufficiently to your investors. You are able in a Reg A+ , as far as the SEC is concerned, you are able to list in Canada, you are able to list internationally. And you know, Asia has the number of exchanges that you can list on and so does Europe. So that's another option to consider. The S e c ignores those liquidity options as long as comp business, your company is conducting itself legitimately and by the rules that those markets impose, you're allowed to list there. But obviously that doesn't help us. Investors usually, or I would say doesn't help pretty clear cut. It doesn't help us investors. You can conduct an IPO via underwritten support to the NASDAQ or the N Y S E that has the market obviously right now is, is, is, is not as excited about IPOs of any stripe, right?
So we're not gonna see too many IPOs in the next few quarters here as the market's in, in the state that it's in currently. But when the market is warm enough that underwriters want to play, then you can conduct IPOs to the major exchanges in Reg A+ Jing, the Reg A+. It's not something you are restricted to doing after it. As soon as you've raised enough money from enough investors that you qualify then you can take your Reg A+ and convert it into an IPO to those major exchanges. You don't necessar you have two options. You can do it via, you can do the last part via underwriters. So let's say you've already raised 16 million online in your Reg Plus, and now you want to go list, that's probably enough money, assuming your burn rate isn't excessive from enough investors to list. So 400 is a good number to start off with, but you'll be typically with 16 million, you'll have far more than 400 investors, then you want to have capacity left to raise to the, for the underwriters to make money, right?
You've gotta give them space to earn their keep to, to, to pay their bills. And so in doing so, let's say you, you, you give them another 10 million to go out and raise in the IPO part in their underwritten portion where they go to their broker dealer syndicate and raise that extra money, then you list. But you can also do a direct listing. And a direct listing is where you are. You've already raised the money, you already have enough investors, you already have enough money in the bank and you've satisfied the other listing requirements at nasdaq. Like, you know, when you look forward 18 months, you're not gonna run out of money. You don't want companies to list that are, you know, likely to run out of money in that kind of timeframe for obvious reasons. So as long as you satisfy those listing requirements, then you can conduct a direct listing to the major exchanges without the use of a broker dealer or even an, or an underwriter or even a broker dealer.
So that's a lovely, lovely thing. What I like about that is it's like much less expensive. You are able to do so even when underwriters won't play. So you hear this phrase, I've heard it many times over the years, the IPO window is closed, right? And what that means is you can't do IPOs unless you know it's the latest startup by someone like Elon Musk. You get a few, but very, very few. So in that context, what does that mean? It doesn't mean the SEC has said No, no, we're not gonna allow any registration statements or Reg A+ IPOs anymore. No, no, no, they don't do that. They're not judging the merit of, of the case. They're not saying, No, you aren't good enough. You shouldn't go and market that company. It's the underwriters that say no, cuz it's not gonna work in their view, it's not worth their time.
They're gonna have to work too hard to raise the money to go list your company. They're the ones that close the door. So if you've already raised enough money from enough investors and satisfy the other requirements, you can do a direct listing. There's one that has been done via Reg A+ a company called Atlas, and their ticket symbol is a M V, they're on the nasdaq, they went public at the beginning of October when public, they, their offering was a direct public listing. It wasn't an I P o a direct public listing, right? So I gave them, I gave them some advice in their preparations to do their direct listing. So I have some good awareness and we have a good awareness of how direct listings work because we've been preparing to help our clients do direct listings for some long time. I see it as a marvelous opportunity because it reduces costs significantly.
And again, it, you can, if the company is strong enough and the marketing forward is strong enough, if the investor interest is there that you already raised the money, then you can go list on the nasdaq. You just gotta make sure you are prepared for the rigors of being a public company on a major exchange, of course. But the opportunity to do it this way, you know, there's only been, there haven't been a large number of direct listings in total via the NASDAQ or the NYSE, but those that have gone so far, almost all of them have been much larger companies and they usually involve underwriters that they were paying less so they weren't making huge savings because it's a new space, it's a new area doing it on time, pretty good. Okay, reporting obligations, I've touched on this, but there are two types of tier of Reg A+ tier one and tier two.
Virtually nobody does tier one. It's around three or 4% of capital raised. It's mostly done by banks and a few companies that are able to raise money in a local, in one state or possibly two states tier. So forget tier one, it's almost never relevant. Tier two goes from zero zero capital raise up to 75 million. There's a regular misunderstanding that it starts at 20 million. It doesn't, it starts at zero. So for tier two Reg A+ es, then you have an ongoing obligation to produce a US gap audit once a year and six month league management financials in US gap format every six months. Every six months when you're not producing the audit and any material event in the company must be reported. So this is a very non onerous reporting obligation. If you choose to go to the NASDAQ or the N ysc, then you have to live up to their requirements, which is and the SEC's requirements, which is quarterly PCA or B level audit.
So it gets a lot more expensive with that. But if you compare being, if you compare going to the OTC QB or the QX, for example, where there is a lot of liquidity then you are only doing a US gap audit once a year compared to companies that were demoted from the NASDAQ or the N ysc where they have this quarterly PCA or B audit obligation. So it's a big advantage in that way. Costs: So we'll get into the schedule in a moment, then we'll get into the the marketing and nuances around an application of Reg A+ use of Reg A+. The, the 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 Reg A+ , 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 Reg A+ 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 Reg A+ 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 Reg A+ 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, Okay?
Schedule many variables here. And the biggest item is the audit, right? If you've got a, an, if your finances are in a mess, it's gonna take a lot longer. So the critical path item can be the audit, but in the case that the audit's already done or that the audit is straightforward, then two months to get ready to fire with the SEC is a reasonable timeframe, assuming management is paying enough attention and two months to get through the SEC is a reasonable estimate. So four months from starting the process to being qualified is very doable. We've had three or four clients, companies that were qualified in a week by the SEC or essentially qualified almost immediately. That was a mix. The SEC seems to like Reg A+, I, I couldn't have said that five years ago, but the SEC does seem to like Reg A+ when it's a conventional offering in it, it doesn't have weird characteristics attached to it.
And so that's part of the reason. And another contributing factor has been during the spec phase, there were so many IPOs that the SEC was spread very thin, and they tended to, they tended to qualify offerings that were straightforward quickly, and the very complicated offerings would be deferred until later. So they did a really good job in my, my book during covid to do things to increase their productivity, to qualify offerings more quickly. And S-1 for that matter, S-1 IPOs. So it could be less than four months, but four months is a good guide as to time. And then once you qualify, you start marketing via whatever method it is, right to your customers to email list. If you've got special, wonderful high quality email lists and obviously via advertising outreach and leveraging the press and social media. So starting that process month five, and you have 12 months in that first year to raise money and you can extend it if you want to.
That's the nature of the beast. You don't spend much money in the beginning on advertising because in the very beginning month five, you know, you don't know the ideal targeting, you don't know the ideal messaging and you don't know if everything about the offering page set up is perfect yet. So we use heat mapping to help with that, for example. So when people like content on the offering page, we can see their activity when they don't like it, we can see that activity when they're confused, we can see that too. So we can do a lot of tuning of the content to optimize it and all of that, all of the component parts, the advertising, the content, the key messages, the offering video, all these things matter intensely on the schedule front. You need to be aware that when you involve a broker dealer, then you involve FINRA.
And FINRA is these days a lot slower than it used to be. It's a relatively slow bureaucracy unfortunately. So be aware that, you know, broker dealer involvement is an option in Reg A+ and it has its advantages, but it is not a panacea. And a lot of entrepreneurs tend to think that by bringing in a broker dealer, that's gonna be a magic solution and they'll raise all the money. When in fact, in the early days of an offering, in most cases, broker dealers will not raise any money because their reps don't want to risk their client relationships for an offering, which is as yet unproven. Because if that investor were to invest, say they put in $25,000 or something and then later that offering does fail then that isolated investor amongst a handful of other ones won't be very happy, right? So usually broker dealers will only raise money once it's already been shown that this is a successful raise.
So that comes down to us, to our marketing agency, to you, to your team, and a lot of excellence to, to, to, to show that this is already a successful raise. And then you can imagine a situation, say six months in where you wanna do an IPO and you bring in an underwriter, we would help with that. Or if you want to bring in a broker dealer or more than one to access more investors, the only time I could see that I, that I see where that makes sense is where we ran out. We found a cost effective, easy to reach target audience through advertising. It was working beautifully. And now we've maxed that they're all those that are going to invest, have done so and the rest aren't going to invest. So now we're going, you know, we're going to target group two and that might be too expensive. So if that's the case, that's a marvelous situation to bring in a broker dealer. But my point about FINRA is, you know, once you've negotiated the deal with the broker dealer, that doesn't mean that you can add them right away. The SEC will add them immediately. FINRA blesses the deal terms, but FINRA is a slow bureaucracy. It might take four or five or six months to get through FINRA. So be aware of that. There are ways you and you don't have to have a broker dealer.
So now I'm gonna get into marketing. Our most recent other prior webinar was about marketing. And so if you have a lot of detailed questions about that, I recommend that you look for that webinar recording on the MSC site by going to the Manhattan Street Capital website and going to the top right with a search box is and doing a search webinar, Reg A+ marketing, that'll find it for you. And you're welcome to email us and ask these things obviously as well. But that's where we go into much more detail about a lot of nuances of marketing a Reg A+ . But right now I'm gonna hit the high level because this is a summary, a summary webinar. So it's the opposite of an S-1 I P O where you are allowed to and you actually have to one way or the other, you have to market your offering, otherwise nothing will happen.
So the fact that you have an offering page on m at street capital or somewhere else and it's beautiful, doesn't mean anything's gonna happen. You have to cause people to go to look, explore it, like it, and invest. You have to make that happen. Advertising online through social media is the most common instrument. Email through bought lists tends to not work very well. There may be some exceptions we have yet to hit that we have not yet found a bought list that worked well. Customer lists are a huge, wonderful opportunity when you have happy customers that, that like what you are doing and value your company. Then as is the case with Bid Angel raising their 10 million with no advertising, they did it via emailing their customer list that they had a good relationship with already. So it wasn't like an email out of the blue that went into spam.
When you are marketing your online raise, it's essential that you always have a clickable link to the offering page and it has to have the offering circular, prominently displayed the offering. Circular is the name of the document that the SEC gives when they qualify your offering. You file a form 10 with the S sec and when it's qualified, it becomes named an offering circular. That's the SEC term. And it's there and has to be there for all investors to see. And when they invest, they have to read the offering circular and check a box to state that they've read the offering circular. Not to say that they are always reading every page in 120 page document, but from an SEC regulatory standpoint all the marketing goes to the offering circular, or at least to an offering page, which prominently displays the offering circular.
So the investors are fully informed when they invest. And in my experience, we, because so many of these investors are optimists, we need to protect them from themselves in any case by, on the offering page in the marketing content, explaining important things about the offering not just relying on them reading everything in the offering circular. I wanna protect. What I want to do with that is, is for our, is with our clients to protect the investors so that, you know, three years from now, they're not subject to the unpleasant brother-in-law, Criti criticizing them for the investment they make. You should have known this, you should have known that. I wanna make sure that they know what they're getting into so they can, if they can crow about the success of their investment three years out. Right?
There aren't very few, I mean, most of the restrictions from the SEC on how you market your raise are very, very reasonable. You cannot use hype. You can't say our company is going to completely revolutionize the internet or biotech or cancer treatment. You aren't revolutionizing it. You know, you have to be specific in your claims. You aren't allowed to predict the future. You can't say, Well, we're doing, we just did 10 million this year and we expect to be doing a hundred million three years from that. You're not allowed to make predictions because the s e wants us to, and we must therefore protect novice investors who are allowed to invest small sums. You know, a typical minimum in a reggae price is 300 or $400 per investment. So anyone can invest, remember. So we are protecting novice investors from being misled and from taking on more than they want to take on. So giving them full disclosure and not allowing entrepreneurs and CEOs to exaggerate is a big part of being a public company and making this offering, which is it's interesting thing. It's a hybrid offering cuz it's a private placement when you start. But once the investments are made individually, they are public investments.
The most expensive part by far is the marketing component by far. And Apple has made that more expensive with their privacy moves, which if there's time I'll get into the nature of Reg A+ investors is that the majority of the money, the most, the easiest to reach audience are people who didn't have the option to do this before. So accredited investors now engage with Reg A+ far more than they used to because it's become credible as a, as a capital raising instrument. But the, your easiest to reach people are Main Street folks. You know, only half of you.
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