You no longer have to swim with the sharks to get working capital for your startup or existing business. New rules designed to facilitate smaller companies’ access to capital went into effect on May 25th.
According to the Securities and Exchange Commission, the rules lift the ceiling on the amount of capital a business can raise in a Regulation A offering from $5 million to $50 million, split into two “Tiers” — up to $20 million in 12 months (Tier 1) and up to $50 million in 12 months (Tier 2). Companies raising less than $20 million will have a choice between Tier 1 and Tier 2. These are public offerings, much like a traditional IPO, but the regulatory burden on the company making the offering is lower, both when the shares are being sold and afterwards.
Every investor, whether accredited or unaccredited, will be able to participate in most of these offerings.
For most entrepreneurs, the best vehicle to accomplish initial equity financing under an exemption is through the use of a Private Placement Memorandum (PPM) under either Regulation A (Reg A+) or Regulation D (Reg D), which is a limited offer and sale of the company’s stock or securities without registration under the Federal Securities Act of 1933.
If you’re confused on where to start our firm’s managed services offerings can assist you every step of the way. We’re not a cut and paste, boilerplate service and discourage you from using one due to the risks involved (i.e., investor lawsuits, etc.). Our Private Placement Memorandums include the following features: