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Summarize Title IV Regulation A+ for me

Summary of Regulation A+ Title IV

Traditionally, investing in startups and other growth-stage companies has been the privilege of the wealthiest Americans. Accredited investors (people making $200,000 or more for two most recent years, or with a net worth of $1 million) were the only ones allowed by the Securities Exchange Commission to invest in startups. Investing is starting to see greater democratization, however.

In 2012, President Obama signed the American JOBS Act into law, which had 10 provisions to improve the working outlook and overall financial opportunities for Americans. Title IV of the JOBS Act, also referred to as Regulation A+, allows companies that want to raise between $3 million and $75 million* to do so from anyone – regardless of assets and income levels.

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What is Regulation A+?

Regulation A+ (or “Reg A+”) is a new way to raise capital created by the Securities Exchange Commission (SEC). Effective March 25, 2015, SEC rules allow companies to test the attractiveness of their company offering to the investor market. This is the RegA+Audition(TM) on Manhattan Street Capital.

Since June 25, 2015, companies have been allowed to apply to make a Regulation A+ offering with the SEC and, when ready, raise capital in our platform and others. We are the first Regulation A+ platform. Manhattan Street Capital and FundAthena, a division of Manhattan Street Capital, will only fundraise for companies that we have reviewed and approved to list their offering on the "Company Offerings" Page.

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What is a Regulation D offering?

According to the Securities Act of 1933, every company has to register their offering with the SEC in order to sell their shares. There are situations where the exemptions allow the companies to sell their shares without a SEC registration. One such exemption is Regulation D or Reg D.

Reg D provides three exemptions from the registration, Rule 504, Rule 505 and Rule 506.For purposes of online equity crowdfunding, Rule 506 is most significant, and it splits into two different variations, 506B and 506C. In each case, only accredited investors are allowed to invest.

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What is Reg S or Regulation S?

Regulation S provides an SEC-compliant way for non-US companies to raise capital and for US companies to raise capital outside the U.S.

A Regulation S offering can issue equity or debt securities. A company that makes their offering under Reg S is also allowed to use another method to raise capital inside the US - usually Reg D or Rule 144A

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What is the difference between Tier 1 and Tier 2 Reg A+ offerings?

Regulation A+ allows for two kinds of offerings, Tier 1, which spans from zero to $20 mill, and Tier 2 that spans from zero to $75 mill.   

Tier 2 allows companies to raise from zero to $75 million per year from individual "Main Street" investors and accredited investors and institutions worldwide. The majority of companies choose Tier 2 because the Tier 1 requirement to get State by State Blue Sky exemption is very slow and very expensive. Companies using Tier 2 do not need to satisfy state Blue Sky requirements to raise capital (with some exceptions). Note that Tier 2 starts from a zero minimum for SEC purposes - I say this because there is a popular misconception that Tier 2 starts at $20 mill. That is not the case! Many companies make successful Tier 2 offerings of less than $20 mill. 

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What is the difference between a Mainstreet Investor and an Accredited Investor?

Regulation A+ allows any investor, worldwide, to invest in private companies. This is a major change in US securities law, and it means that anyone can invest, if they choose to do so, in a Reg A+ offering, after it has been Qualified by the SEC. Before Reg A+ became effective in 2015, only wealthy, Accredited investors were allowed to invest in private companies. 

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What types of mid size companies are best suited to Regulation A+ ?

In our opinion, a company’s consumer appeal is the most important factor (once we have established the strength of the management team, a strong strategy, large and growing market, rapid growth rate and barriers to competition). A large and happy customer base and tremendous consumer appeal are very indicative of success. Consumer investors are the least expensive to bring to your offering, compared to accredited investors and institutional investors.

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What types of start ups suit Regulation A+ ?

We work with mid-stage companies and mature startups that we consider a good fit for Reg A+. In our opinion, a company’s consumer appeal is the most important factor (once we have established the strength of the management team, a strong strategy, large and growing market, rapid growth rate and barriers to competition). A large and happy customer base and tremendous consumer appeal are very indicative of success.

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How can I use Manhattan Street Capital to raise money using Reg A+ ?

Manhattan Street Capital raises money from individual investors for select, low risk, start-ups, and successful mid-sized companies. Your company can raise from $4 million to $75 million each year. (there is no actual minimum, but the fixed costs of doing a Regulation A+ offering mean that it is not efficient for raising less than $4mill. Fixed costs that need to be spent before receiving the new capital are at least approx $100k).  

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Reg A+ liquidity explained for insiders and investors
Reg A+ provides that investors will be liquid upon the completion of the offering they invest in.  And up to 30% of the capital raised may be from insider selling (rarely done). But there is a lot more upside to Reg A+ than this;This answer continued
What is RegA+ Audition (TM) ?

Test how well Regulation A+ will work for your company in our new RegA+Audition(TM) program. Audition and get input from our members and investors.

This service is for you if you want to conduct a low-cost market test of your companies’ appeal to investors before you commit to the costs of a Reg A+ offering. We have put it all together for you with a separate marketing agency that provides the marketing guidance and digital advertising

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How much does a Regulation A+ IPO cost?

IPO costs

This is what you should expect in terms of costs if you decide to conduct an IPO via Reg A+.

  • Legal fee: $90k (upfront)

  • Broker fee: 8% of the total capital raised

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Cost of Taking Your Company Public Using Regulation A+, if you choose this route.

The question is what is the cost to take my company public using Regulation A+ on Manhattan Street Capital? These are the costs. The first cost is marketing so probably the minimum you could get away with for an offering that is easy to sell is 4% but 6-7% is more typical, in marketing cost. (not charged as a percentage)

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What are the costs involved in raising capital via Regulation A+?

As a top-level view, expect that costs for a completed offering will be in the 12%* of capital raised range, approximately, including all the different factors. The only fee that is charged as a percentage is for a broker-dealer when one one is involved. We get you a 1% Broker Dealer fee for Broker-Dealer involvement when a basic level of engagement is sufficient (which is true for most cases where the emphasis is on raising capital online).

*Fees that need to be paid before the first capital closing amount to a minimum of approximately $160k minimum and much higher for larger offerings - see below for more detail.

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How much does a Regulation S offering cost?

Costs for a Regulation S offering

  • Legal fee: $10k - $30k depending on complexity. The legal document is very similar to a Reg D offering/PPM, so for companies making a Reg D and a Reg S, the added cost of the Reg S will be small.
  • Marketing costs: We introduce experienced and efficient marketing agencies to you and help you manage them. The total cost of marketing will typically range from 4% to 8% of capital raised (not charged as a %). 

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How much does a Regulation D offering cost?

Costs for a Regulation D offering

  • Legal fee: $12k - $30k depending on complexity.
  • Marketing costs: We introduce experienced and efficient marketing agencies to you and help you manage them. The early-stage cost of preparing the marketing content, the offering page and advertising will be approximately $35k. The total cost of marketing will range from 6% to 8% of capital raised (not charged as a %). 

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Cost guide for an STO with Manhattan Street Capital?
  • Attorney fee $12k - $60k depending on complexity. (Reg A+ is at least $50k)
  • Marketing fee paid to the agency that we introduce if needed, expect to cost 2% to 4% of capital raised not charged as a %. 

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What fee does Manhattan Street Capital charge?

See the detailed fee schedule by clicking the blue button below;

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What Is The Timeline or Schedule For A Reg D Offering?

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Timeline Schedule For A Reg A+ IPO To The NASDAQ or NYSE

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What Is The Timeline For A Reg A+ Offering?

Schedule for a typical Reg A+ offering

Summary view timeline for a  Reg A+ offering via Convertible Notes

 

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How does the investment process work on Manhattan Street Capital?

Step 1.

The investor enters the investment process by clicking on the "Invest Now" button on the offering page.

Step 2.

The investor completes the forms and provides us with all the information that is needed to make an investment. This step doesn't take longer than 5-10 minutes.

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What Are The Differences Between An IPO and ICO?

They are remarkably different. In the case of an IPO, the issuer company provides shares of ownership to investors in the company, this is not necessarily the case with an ICO. In an ICO/STO (usually) custom Tokens are developed as a key part of the business model of the company making the offering. The issued Tokens can serve several purposes, depending on the company’s business model.

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Is Regulation A+ an Initial Public Offering - IPO?

Reg A+ can be used for an IPO to the NYSE or NASDAQ and, starting in June of 2017 a significant number of companies have made their IPOs via Reg A+.

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The Best Ways To Use Reg A+ For An STO

A key challenge when using Reg A+ for an STO is that in most cases, the tokens have not yet been developed, so accepting payments from investors to buy the tokens directly is impossible because they cannot be delivered. Imagine selling stock in a company when you don't have any shares to sell - rather challenging! 

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Create your Reg A + offering - how to make your offering the best it can be!

At the beginning, your offering will be in the TestTheWaters(TM)  process, where you are checking to see how interesting investors find your company and the idea of investing in it.

You need to make your offering accurate (no hype), entertaining, and informative in a graphical and visually pleasing manner. As time progresses, you will make your offering more and more specific. It does not need to state the size of the capital raise you would like, the valuation, or share price at first.

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How can I raise capital for my Real Estate company using Regulation A+ ?

We are seeing more signs that Real Estate offerings are taking the early lead in Regulation A+. The fact that consumers already understand and identify with real estate as an investment is helping, as has already been shown in the Title II/Reg D field. Regulation A+ is broadening the appeal of real estate to nonaccredited investors worldwide. Another major factor is the payment of attractive rates of interest on invested capital. Consumers find that appealing and are more likely to invest as a result.   

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Can I do a RegD 506c Offering on Manhattan Street Capital?

Yes, we do put Reg D 506c Offerings on our platform when we believe that your offering will be successful. 

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How to do Updates for my Regulation A Plus Offering?

You’ve heard it time and time again - communication is key. When it comes to Regulation A+ equity CrowdFunding, this is especially true. Potential investors are the backbone of your offering. It is important, to be honest, transparent, candid and emotionally open from launch day through completion and on an ongoing basis thereafter.  

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Do I Have To Take my Company Public To Use Regulation A+ ?

The answer is No. You can choose not to list your company on a marketplace, and then your shares will not be public.  Regulation A+ allows you to make your shares liquid after the offering, but it is not required. In Tier 1 offerings the only reporting requirements post offering are to report to the SEC any significant change in the business.

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What is the Greenshoe used in IPOs?
The term "Greenshoe" option is the only SEC-sanctioned method for an underwriter to legally stabilize a new issue after the offering price has been determined. The SEC introduced this option to enhance the efficiency and competitiveness of the IPO fundraising process.This answer continued
AML Policy Statement
All investors that initiate investments on the Manhattan Street Capital platform are required to pass the AML test before they complete their investment. No investors will be accepted unless they first pass AML.This answer continued
Our International US-STO program for companies outside the USA

It is confusing for non-US ICOs and STOs to know how to access US investors while working within the US SEC regulations for securities offerings and to build a strong presence in the US market to build your business in the US market. Manhattan Street Capital is the leader in solving these problems for client companies.

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How much will it cost for reporting as a Reg A + public company if I take this route?

What is the ongoing cost of reporting having completed your Regulation A+ offering?

If you choose to be listed on the OTCQB marketplace then you’ll need to report financials once every six months with an audit once a year, and if you are listed on the OTCQX marketplace then you’ll need to report financials once every quarter, with an annual audit. If your company meets the requirements of the bigger markets, you can choose to list your company on the NASDAQ or on the NYSE.

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Who can invest in a Reg A+ offering?

Anyone! Mainstreet investors worldwide (see the exceptions below) can invest under Regulation A+. Ordinary investors don’t have to be wealthy to invest! Investors are welcome from almost anywhere in the world.  To read complete answer click on blue button below.

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Can I Raise More Than $75 mill in a year using Reg A+?

Yes, in some circumstances. For businesses that lend themselves to segmenting their market, it may be possible to make multiple offerings by following a similar model to the one that Fundrise has used. Each Reg A+ entity is a standalone business and shares one management service provider. In this way, Fundrise has conducted multiple Reg A+ offerings simultaneously since 2016. So far this model has only been Qualified by the SEC in Real Estate situations, but the SEC may allow the same approach in other business areas. We don't know yet.

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Issuer Dealer And Agent Registration Requirements for Tier 2 Offerings

These communication rules can help companies go it alone, so to speak, without the assistance of a registered broker-dealer. In a traditional offering, a broker-dealer acts as an intermediary bringing investors to the issuer for a fee. For a company seeking investors among the general population, a broker-dealer may not be necessary to have a successful Regulation A offering. Issuers are able to publish their own marketing material about the offering, create their own online campaign pages, and generally solicit their targeted investor base. This may be especially relevant for consumer-facing companies interested in engaging customer-investors.However, companies issuing securities in a public offering without the involvement of a registered broker-dealer should be aware that the company may be required to register in certain states as an issuer-dealer, or have members of its management team register as agents of the issuer. This memorandum provides an overview of the registration requirements for issuers and agents of the issuer when making offers and sales of securities in specific states that require such registration. This memorandum will focus on offerings under Tier 2 of Regulation A, as Tier 2 provides for preemption of state review of the offering and securities sold under a Tier 2 offering are considered “covered securities” under Section 18 of the Securities Act.

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Advise me how to make my Reg A+ offering succeed?

Guidance and tips how to succeed with your companies Reg A+ Offering:

There is more and more evidence that at this early stage in the Reg A+ funding market, companies must resonate strongly with consumer investors to succeed. That appeal, plus first-rate marketing with front-loaded impact and budget, is required to bring in consumer investors and to prove traction early. Even in offerings that are attractive to broker-dealer syndicates, in most cases, brokers will not act to promote an offering to their clients until early success is apparent from consumer investors.

The scope of companies that will fit Reg A+ will gradually expand as wealthy investors and institutions engage. Expect to see Registered Investment Advisors begin to allocate their clients' capital in small amounts to Reg A+ offerings over the coming year. AIG stepping in, as reported last month, is significant here.

In the open forum inherent to Reg A+ offerings, success in the first few weeks is a must to show all interested parties the offering is going well.

Companies should set a low funding minimum unless they are buying a fixed price asset. This makes easier to make the offering go live and conduct the first closing and to pay for subsequent marketing from capital raised.  

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Manhattan Street Capital's ICO & STO Investment Process and Services via RegD, Reg S and Reg A+

Enable investors worldwide to quickly and easily invest using any language.

Accept all popular cryptocurrencies,

Automate investor subscription document eSignature.

Conduct KYC and AML on investors.

Verify that the AML approved investor is the one who actually makes the investment where ambiguous.

Verify investor Accreditation (Reg D)

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What is the best situation to use Tier 1 in Reg A+ offerings?

These are the ideal situations where Tier 1 is best:

1) All your investors are local and in one State, and the State is easy to get your Blue Sky filing qualified. See the detailed list of States and how they work.

2) Your company is a bank that is exempt from State Blue Sky filing requirements.

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Completed IPOs via Reg A+, Listing Here

This is the list of the companies that completed their Reg A+ IPO and listed on the NYSE or NASDAQ

Arcimoto, Inc. - $19 million (NASDAQ),

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Which shareholders get liquid first in a Reg A+ offering?

There is no special sequence, no preference. The company itself, and any selling shareholders in an offering are made liquid on a pro-rated basis throughout the offering.  So for example, if an offering is ended at 92% of the maximum goal, then all the selling shareholders in the offering will have sold 92% of the shares that they intended to sell in that offering.

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What Is The Timeline For A RegD/Reg S STO Via Convertible Notes?

Schedule For A Reg D/Reg S STO Via Convertible Notes

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Can I use Reg A+ if my company is not in the US?

Yes. If you set up a company in the USA or Canada then you are allowed to use Reg A+ using that entity.

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What Is The Timeline For A Reg A+ STO Via Warrants?

Schedule For A Reg A+ STO Via Warrants

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What Is The Timeline For A Reg A+ STO Via Convertible Note?

Schedule For A Reg A+ STO Via Convertible Note

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How to market your Regulation A + company offering

One of the great things about the Reg A+ system is that you are allowed to market your company widely. It's the opposite of the traditional IPO "Quiet Period". This means that you are allowed (and you won't succeed if you don't do this) to market your company and gather non-binding reservations before SEC Qualification of your Offering. After SEC Qualification, you can actively market to actual investors through all methods to generate investments.

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What is Testing The Waters in Regulation A+ ?

Testing The Waters (TestingTheWaters(TM)) enables companies to test market themselves to see if there is enough investor interest to make a Regulation A+ capital raise successfully.

The SEC created this program so companies can make this test before having to spend the time and money it takes to make an SEC filing and get an audit done. The SEC allows companies to market themselves in TestTheWaters(TM) with few restrictions. So companies can cost-effectively conduct a test using social media, email, online advertising and more. During this process, we provide the ability for potential investors to make non-binding reservations in a company they like. We charge $1,000 per month for it, paid in advance monthly.

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What is a Security Token Offering?

A security token is a token that is sold to investors via one of the SEC regulations - Reg D, Reg S, Reg A+ and Reg CF are good examples. A Registered S-1 IPO is another route. This type of ICO is also called a Securities Token Offering or STO.

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What Is The Timeline For A Reg A+ Tier 2 STO?

Schedule For A Reg A+ Tier 2 STO

  • 1. Choose which funding method would be the best fit for your company, it depends on several different factors. Get legal advice on the details. We can recommend you to a securities lawyer. Select a marketing agency that will manage your 360° marketing campaign. We will introduce you to experienced marketing agencies. Get legal advice.
  • 2.A. In the case of a Tier 2 offering, you are required to have a two-year Audit, if your company has existed for less than 2 years, the audit period will be the age of your company.
  • 2.B. Engage a legal service provider to do your SEC filing. We can introduce you to good service providers.
  • 3.A. Start the Form 1A filing with the SEC. Get Qualified by the SEC.
 

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What Is The Timeline For A Reg A+ Tier 1 STO?