Regulation A+ has significant advantages;
Regulation A+ allows startups and mid-stage companies to use equity crowdfunding platforms (such as Manhattan Street Capital) to raise as much as $50M from both accredited and non-accredited investors.
If you set up legal Headquarters for your company in the USA or Canada then you are allowed by the SEC (Securities and Exchange Commission) to use Reg A+ to raise capital. Most companies that take this route set up a "C" Corporation in Delaware but you can also set up an LLC or a Limited Partnership. We introduce you to experienced and affordable attorneys if needed.
Reg A+ is separated into two tiers, Tier 1 and Tier 2. Tier 1 allows you to raise up to $20M, while Tier 2 allows you to raise from zero to $50M. The big advantage of Tier 2 is that when you raise money from investors in US States, you do not have to satisfy the US State's Blue Sky regulations, which makes the process faster and simpler. If you will raise capital from US investors in multiple US states, then Tier 2 is the best method to use because dealing with the US states is far easier in Reg A+ Tier 2. Tier 2 offering size range is from zero to $50 mill per year.
If most of your investors will come from a few US states, then using a Tier 1 Reg A+ can be worth using. The advantages of Tier 1 are that you do not have to file an Audit with the SEC and you do not have to make revenue and profit reports every six months after your offering completes. The hassle and time involved in gaining access to all US states make most companies use Tier 2.
You can list your company on the NASDAQ, NYSE, on the OTCQB or the OTCQX, or choose not to list your company at all. The SEC allows the investors in Reg A+ offerings to sell their shares after the offering. Your company can choose to lock the shares or to provide alternative forms of liquidity. The investors in a Reg A+ offering can come from anywhere in the world.
Regulation D & Regulation S (often used together)
For companies based outside the USA, with a Reg D (506c) offering, your company can raise an unlimited amount of capital, but only from accredited investors. It is allowed for the issuing companies to promote and advertise their offerings. The issuer companies have to take steps to verify that the investors are actually accredited. The filing with the SEC is very simple - it is a notice filing using a Form D, which includes information about the company's offering, promotors, the companies themselves, and some further information. This can be done in one or two days.
Reg S can be a good compliment to Reg D, in that Reg S allows non-US investors to invest in a US company or non-US company on a similar basis to the Reg D terms, without the need to be accredited investors. No SEC filing is required.
Regulation S provides an SEC compliant method for company capital offerings that are made outside the U.S by both foreign and U.S companies.
Security Token Offerings (STOs) that use Reg A+ or Reg D to be legitimate securities offerings.
STOs are new type of capital raising method for startups based on digital blockchain technology.
STO means Security Token Offering (because the tokens are sold as securities to the investors). It’s a process where a company creates and sells its own specialized Tokens (generally) in exchange for payment in Bitcoin, Ethereum and other digital currencies (also called cryptocurrencies), with the purpose of raising capital to build a startup business. As a result, the company collects capital to fund the product development and marketing of their business, and the investors receive new specialized Tokens. These Tokens are developed with specialized functions built in, that enable innovative new blockchain based capabilities.
In early August of 2017 the SEC made it clear that in most cases Initial Coin Offerings are considered by the SEC to be securities transactions, so the existing body of SEC regulations apply fully to them.
There are three primary SEC Regulations that are well suited to raising capital through the sale of securities to investors online. They are Reg D 506C, Reg S and Regulation A+. These rule systems are used widely and are well understood. Either one of them can be used with STOs, as long as the STOs are carefully developed with compliance to these rules built in. Reg A+ is a more natural fit because it allows investors of all wealth levels anywhere in the world to invest, which is one of the highly appealing aspects of STOs.
In the investment process, companies can use the usual Smart Contracts, and convertible notes can be used to raise investment capital before the tokens have been completed.
Manhattan Street Capital's role in the capital raising process
Our first step is to help companies assess if Reg A+ (and in select cases, Reg D and Reg S) is a good fit for their business and funding needs. Besides conventional offerings, we also host and consult for STOs on our platform that use Reg A+, Reg D or Reg S, to be securities rules compliant offerings.
We assist companies through the whole capital raising process to achieve a successful offering. Our website technology integrates the necessary services so companies can make their offering work efficiently on Manhattan Street Capital. We provide KYC services to the issuers, every investor goes through an AML check, and Accreditation Verification process if required.
We provide some services directly, others we provide by introducing client companies to specialized service providers: Specialized Marketing agencies, Legal, Broker/Dealer, Investment Banks, Underwriters, Market Makers, escrow, transfer agent, markets (NASDAQ, NYSE, OTC Markets) and auditors.
Among services that we provide through Manhattan Street Capital are; Consulting, Project management and coordination, and of course Listing Company Offerings. We have developed unique proprietary AI technology that improves the process and the results of our online listing services. We are selective and we add value to the offerings that we assist with.
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital marketplace 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.
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108. Phone 1 858 366 2585