The JOBS Act proposed some changes to improve it and make it an useful and efficient process to raise finance from non accredited investors for those companies that do not wish to or are not ready yet to go public. With the SEC’s vote, the proposed changes have now become reality and companies leveraging Regulation A+ can raise finance through some sort of “Light IPO”, as some are calling it.
In particular, Regulation A+ as approved by the SEC sets up two offering tiers:
- Tier 1 is for companies willing to raise up to $20 million per year. This option requires SEC and state blue sky review, but no financial audit.
- Tier 2, instead, is for companies willing to raise up to $50 million per year. Only SEC review is required but no state blue sky review. In this case the company also has audit and reporting obligations.
Both offering Tiers are open to both accredited and non accredited investors, the latter of whom who can invest up to 10% of their net worth. Companies raising capital under the regulation don’t need to register with each individual State they want to raise finance in, as required by the previous regulation. Regulation A+ is due to enter into effect in 60 days.
With these modifications, Regulation A+ has all the premises to become a real game changer for access to capital and investing in the USA. In fact, on one side, companies that are neither early stage nor mature enough for an IPO can now access the capital they need to finance their growth soliciting it from potentially all US adults; on the other side, early stage investors will have the chance to get some liquidity, after having had their money tied up for many years,without waiting for the IPO.
Crowd Valley welcomes Regulation A+ and believes that it will have a fundamental impact on the capital markets. The SECs ruling on the definition of a Qualified Purchaser for Regulation A+ is also groundbreaking and will likely result in wider applicability of the newly enacted regulation.