If you talk to investment bankers right now, you will likely hear a familiar phrase: "The IPO window is closed."
When they say this, it sounds like an absolute rule—as if the SEC has stopped accepting filings or the market has simply shut down. But that is not what it means. What it actually means is that the underwriters won't sign you up and deliver for you because the market is too tough for them to raise the money.
For the companies I work with, the IPO window does not close.
In this post, I want to compare the traditional S-1 IPO route with a strategy that is becoming increasingly attractive for mid-sized companies: the Direct Listing via Regulation A+ (Reg A+).
The Reality of the "IPO Window"
In a traditional S-1 IPO, you are dependent on underwriters to sell your deal. If the market is volatile, they pull back. They tell you to wait.
But with Reg A+, we are raising money online directly from the public. If you have a compelling offering, we can raise money in this market, just as we could in last year's market. It is not a matter of theory; it is a matter of practice.
This independence is the single biggest strategic advantage of the Reg A+ Direct Listing. You are not waiting for permission from a bank to capitalize your business.
How a Direct Listing via Reg A+ Works
In a traditional IPO, the capital raise and the listing happen simultaneously, orchestrating a high-pressure event that underwriters control.
In a Reg A+ Direct Listing, we separate these steps:
- Raise the Capital First: You use Reg A+ to raise your capital online from investors (accredited and non-accredited) while you are still private. You build your shareholder base and your balance sheet.
- List Second: Once you have raised the capital and met the shareholder count requirements, you list the company on the NASDAQ or NYSE via a direct listing.
The Economics: Saving the 8.5%
Beyond the timing control, the financial impact is massive.
When you do a direct listing after a Reg A+ raise, you have essentially already raised the money from enough investors to list the company, so you do not need to use an underwriter for the listing event itself.
This means you save the typical 8% to 8.5% commissions, the warrants, and the other heavy front-loaded expenses that come with a traditional underwritten IPO. For a company raising $50 million, that is millions of dollars that stays in your treasury rather than going to a bank.
The "Real Deal" for Small Cap Companies
We have seen a massive transition in the capital markets. Regulations like Dodd-Frank and Sarbanes-Oxley made it so expensive to be public that capital moved out of the public markets and into the private markets.
Reg A+ provides a path for smaller companies to reverse that trend. It allows you to get public more affordably and be listed on the NASDAQ as a micro-cap stock.
This is the real deal. It is a pragmatic, cost-effective way to access the public markets without the massive dilution and gatekeeping of the traditional S-1 process.
If you are tired of hearing that the window is closed, it might be time to look at a window you can open yourself.
The Role of Manhattan Street Capital
At Manhattan Street Capital, we are not underwriters or broker-dealers. We are an advisory and technology platform. We help you navigate this "Wild West."
We help you:
- Assess Suitability: Is Reg A+ actually the right fit for your company?
- Assemble the Team: We introduce you to the right auditors, marketing agencies, and legal counsel who know Reg A+ inside and out.
- Host the Offering: We provide the platform where investors (both accredited and non-accredited) can easily buy your stock.
Why Manhattan Street Capital?
For companies interested in pursuing an IPO or Direct Listing on NASDAQ or NYSE, we provide comprehensive support, from initial planning to post-listing compliance. Our goal is to help you achieve a successful public offering while minimizing costs and maximizing investor engagement. Our proprietary payment processing platform is extremely easy for investors to invest with, we provide top notch marketing and CRM integration and the lowest payment processing fees in the business.
To get started or learn more about how we can assist you with your capital raising needs, please email [email protected].
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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.
