How Reg A+ enables raising up to $50 mil from the general public

Given that only a few marketplace lenders accept money from retail investors, Regulation A+ may be a viable option to help these platforms diversify their funding sources away from institutional capital.

One of the overarching themes at LendIt 2016 last week was the current liquidity and funding challenges in the capital markets and platforms’ difficulty in raising new venture capital. It was apparent to many industry participants that there is a need to diversify sources of funding. I had the pleasure at LendIt to sit down and discuss Regulation A+, a new capital raising option for startups and emerging growth companies, with Jason Gilbert, a Partner in the San Ramon office of Armanino LLP. Armanino is the largest independent accounting and consulting firm based in California and one of the largest firms in the U.S. Jason has extensive knowledge in crowdfunding and helps emerging companies navigate this brand new capital channel. He advises clients on everything from annual assurance services, day-to-day accounting, offering document structuring, back office operations, and management software.


$50 million in a 12-month period with no restriction on the number of investors
As part of the JOBS Act of 2012, Regulation A+ (“Reg A+”) became effective on June 19, 2015. The original Regulation A limited startup fundraising to $5 million in a 12 month period, and to only 35 non-accredited investors. The new and improved Reg A+ now allows startups to raise up to $50 million in a 12-month period with no restriction on the number of investors. This vastly increases the pool of eligible investors; over 90% of the investing public previously couldn’t invest in startups even if they understood the risk and had the liquid capital to deploy, because accredited investors make up less than 10% of the US population, according to the SEC. For the first time, private emerging growth companies can raise money from nearly all Americans.

Sharestates filed for $50 million Reg A+
Some in the securities industry have referred to Reg A+ offerings as “mini IPOs” because a logical use is to raise equity capital in early funding rounds for startups. In fact, most of the Reg A+ deals announced to date have been common equity offerings, with a few preferred equity offerings. However, as Jason explains, Reg A+ offerings can be for any type of securities: debt, equity, convertibles, etc. In December 2015, Sharestates, a marketplace lender catering to small business borrowers, filed a Reg A+ offer to raise up to $50 million in debt securities.

What are the steps ?
Companies looking to raise capital via Reg A+ still need to file and be approved by the SEC before launching an offering. But Jason pointed out that one of the big benefits for a company considering a Reg A+ offering is that can “test the waters,” or get indications of interest, before proceeding with a public securities offering. In other words, an issuer can contact investors with potential terms of the offering in order to make an educated decision on whether or not to proceed with an offering, and before spending time and money on the process.

Tier 1 vs Tier 2 offering
Jason also detailed for me some of the main differences between Tier 1 and Tier 2 offerings:

While Tier 2 offerings allow for raising up to $50 million in a rolling 12-month period, Tier 2 filers are subject to ongoing SEC reporting following the raise. Tier 2 issuers must file audited financials annually and must abide by more stringent reporting requirements. However, they are exempted from state registration requirements.

Tier 1 offerings are limited to $20 million during a 12-month period, but are not required to file audited financials, and ongoing filing requirements are much less stringent. However, Tier 1 issuers are required to register their securities under the Blue Sky laws of the states in which they are sold (or qualify for an exemption). But because most states would have their own requirements for audited financials as Jason noted, the odds are that most Reg A+ issuers will likely end up filing for a Tier 2 offering.

Difficulty of Reg A+
Like any offering, Regulations A+ has its own unique benefits and things to consider with regards to regulatory compliance. It is important to have strong partners that can help the issuer to prepare for the reporting requirements that go along with such an offering, and to guide the issuer through the registration process. California-based Armanino LLP is in the unique position of being well versed in Regulation A+ and has a deep expertise of emerging companies who have outgrown their small shop solution. These companies need advisors who can grow with them, help them with their strategic position, manage their day-to-day operations, and remain in regulatory compliance.

mark-d-smith-150x150 (1)
mark-d-smith-150x150 (1)

About Jason Gilbert and Armanino LLP

Jason has more than 10 years of public accounting experience, with specialized expertise in the real estate lending sector, including private equity funds, real estate crowdfunding and peer-to-peer portals. In addition to annual assurance services, he helps these clients with day-to-day accounting, the structuring of offering documents, financial close, back office operations and fund management software. He is also a key member of the private education practice. He has extensive experience helping private schools with value-added initiatives, including key performance indicators and peer-to-peer benchmarking. Jason is a member of the American Institute of Certified Public Accountants, the California Society of Certified Public Accountants, the California Mortgage Association and the American Association of Private Lenders. He earned his BS in business administration and his MBA from California State University, East Bay.

Armanino LLP is the largest independent accounting and consulting firm based in California and one of the largest firms in the United States. Armanino provides an integrated set of audit, tax, consulting, business management, and technology solutions to companies in the U.S. and globally. Armanino extends its global services to more than 100 countries through its membership in Moore Stephens International Limited—one of the world’s major accounting and consulting membership organizations.


Tags: , , , , , , , , , , , ,


This RSS feed URL is deprecated, please update. New URLs can be found in the footers at [...]

Oregon BusinessFor-profit giving normalized as crowdfunding maturesOregon BusinessNot so long ago, people might have thought twice about donating money to a for-profit company. But In the few years since crowdfunding debuted, thousands of companies have used online fundraising platfor [...]

New York PostToy tycoon leads crowdfunding effort to save Toys R Us brandNew York PostA budding campaign to buy Toys 'R' Us has hit a few bumps in the road, but its billionaire backer said he's just getting started. More On: toys “r” us · The best way to shop Toys [...]

ARL nowCrowdfunding Campaign Launched for Ballston Homicide VictimARL nowGiandoni, who would have turned 41 on Wednesday, was found dead in his home in Ballston last weekend. Police later determined his death to have been a homicide, though few details have been revealed about the cir [...]

4NEW To Implement Ocular KYC solution before completing ...BitcoinistLondon, England. 4NEW announced today that it will pause the current fundraising efforts on March 27, three days earlier than planned in order to allow the team to complete implementation of their KYC/Anti- Money Lau [...]

Jacaranda FMCape Town couple turns to crowdfunding for their dream weddingJacaranda FMMartea Roos and Marcel Steenkamp would love to be able to afford the wedding of their dreams. Would you donate towards their goal? Read on to see how you can help them, or find another worthy crowdfu [...]

Allentown Morning CallBillionaire toy executive hopes to raise $800 million via crowdfunding to save Toys R UsAllentown Morning CallIsaac Larian, the billionaire toy executive behind Bratz, Little Tikes and L.O.L. Surprise! dolls, wants to save Toys R Us. (Christopher Lee / Bloomberg) [...]

Honolulu Star-AdvertiserIndie film 'Waikiki' seeks crowdfunding boostHonolulu Star-AdvertiserDanielle Zalopany, right, stars as Kea in the independent feature “Waikiki,” set for release later this year. Zalopany is a Po'okela Award-winning actress and has appeared on CB [...]

KGO-TVGroup launches crowdfunding campaign for homeless on San ...KGO-TVTake it to the Streets has launched a $50000 crowdfunding campaign to provide housing and services for homeless young adults.and more » [...]

Multiple Sclerosis News TodayAmerican Brain Foundation Starts Crowdfunding Campaign to Help Fight MSMultiple Sclerosis News TodayThe American Brain Foundation has started a crowdfunding campaign to support research that could lead to treatments for multiple sclerosis and other autoimm [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |