CHAPTER 6Early Experience with Regulation A+; Wall Street Partners with Main Street
In late November 2017, the SEC announced that, through September 30, 2017, 69 Reg A deals have closed under the new rules. These offerings raised a total of $611 million, or $8.8 million per offering. And as we know the stock of seven of those companies is now trading on a national exchange.
It appears thus far that four distinct approaches to the new Reg A have evolved. First is a large group of players in the real estate world using Reg A to raise money from the public with no intention of publicly trading their stock. Second are companies moving on their own, without the assistance of underwriters or selling agents, to file with the SEC and complete an IPO. Many of these are relying on either an existing customer or fan base of the company, or are partnering with existing crowdfunding sites to fill the offering book.
Third are traditional underwriters realizing that Reg A+ can be used to complete an IPO much like in the past but taking advantage of the speedier SEC review. The fourth and last group, potentially the most interesting, are seeking a hybrid between a traditional underwriting and crowdfunding. They combine the brave new world of social and traditional media promotion with “old school” retail and institutional brokers enticing their customers to participate.
We will examine each of these in turn, after which we will turn to a discussion of what industries appear to be or in time ...