Regulation A is a kind of offering that allows private firms to raise up to 50 million dollars. The funding is obtained from the public. The private company sells the shares to the general public. You are not only allowed to sell to the recognized investors. Before you get the Reg A funding, you will first be required to file with the SEC. before you raise start setting up the mini-IPO, you will be required to get an approval. The cost of the reg A+ is lower than the traditional IPO.
There are several benefits that you get from Reg A. your financial statement is not audited when you are raising the money. The process by which the finding raises is very effective. The source of the funding is very engaging. You will get the money very quickly.
When you do regulation A, you will retain control of the company. The regulation allows you to raise a huge amount of money for your company. When you sell the shares to the public, you will distribute the ownership of the company. You will still retain the ownership of the company. On the outset hand, accredited investors will take a lot of control over your business will be like kick you out of your business.
You are not required to meet the requirements in the exchange act reporting. You are only allowed to do so if only you have a minimum of 500 investors in your company. The asset of the company should be over 10 million dollars. Under regulation A, you can raise up to five million dollars within a span of one year.
You also enjoy unrestricted securities. This means that you need to sell your securities at any time, you can do so without any complication. If you intend to liquidate your company in the future, you will greatly benefit. Also, before you can easily test if there is an interest in your private company. In the Reg A, no bad actors are allowed to participate in your offering.
While you are completing the Reg A, there are different costs that you will incur. You will require a legal advisor, who will help you in creating the circular. The cost of the advisor varies from one advisor to another. you will also be required to promote the offering. the estimated cost of this promotion can be up to 50000 dollars.
You will also require a transfer agent. This agent charges the services fee as a percentage of the total funding. Another money that you will be charged if the listing of the offering. you will be required to file the annual report. Finally, you will incur expenses if you are going to use a broker-dealer. The broker-dealer charges seven percent of the total funding.
A company such as FundpepoTM is very famous for assisting private companies tp raise companies. All you will need is to post your listing on its website. The company also provides advice on the company on the IPO and the funding process.