Regulation A+, often called a "Mini-IPO," is a powerful way for private companies to raise up to $75 million from both accredited and non-accredited (retail) investors. It sits perfectly between equity crowdfunding and a traditional IPO on the Nasdaq or NYSE.
Here is an outline of what you need to launch and manage a Regulation A+ offering.
1. Choose Your Tier
The first step is deciding which "path" fits your capital needs and compliance budget.
| Feature | Tier 1 | Tier 2 (Most Common) |
|---|---|---|
| Max Raise | Up to $20M (12-month period) | Up to $75M (12-month period) |
| Investor Limits | None | Non-accredited limited to 10% of income/net worth |
| Audit Required? | No (Reviewed only) | Yes (PCAOB or AICPA standards) |
| State "Blue Sky" | Must register in every state sold | Preempted (Federal law overrules state) |
| Ongoing Reports | None (only an exit report) | Annual, Semi-annual, and Current event reports |
2. Core Filing Requirements (Form 1-A)
To get "qualified" by the SEC, you must file Form 1-A via the EDGAR system. This is essentially your "Mini-Prospectus."
- Offering Circular: A detailed narrative of the business, including:
- Use of Proceeds: Exactly how you plan to spend the money.
- Risk Factors: What could go wrong (competition, tech shifts, etc.).
- MD&A: Management’s Discussion and Analysis of financial health.
- Dilution: How the new shares affect current owners.
- Financial Statements: * Two years of balance sheets, income statements, and cash flows.
- Tier 2 requires these to be audited by an independent CPA.
- Exhibits: Underwriting agreements, legal opinions, and material contracts (leases, IP licenses).
- Securities Counsel: To draft the Form 1-A and handle SEC comments.
- Independent Auditor: To provide the required 2-year financial audit.
- Transfer Agent: To track who owns your shares and handle dividends/issuance.
- Broker-Dealer / Platform: While not strictly required, most companies use a platform (like StartEngine or DealMaker) to host the offering and handle the "Check-Out" process for investors.
- Marketing Agency: Unlike a traditional IPO, you are responsible for "driving the bus." You need a digital marketing plan to find retail investors.
- Preparation (1–2 Months): Audit financials and draft the Offering Circular.
- "Testing the Waters": (Optional) You can market the idea to see if there is interest before spending money on the full filing.
- SEC Review (2–4 Months): Submit Form 1-A. The SEC will send "comment letters" asking for clarifications. You respond until they "Qualify" the offering.
- The Live Raise: You can now legally accept money. This can stay open for up to 12 months.
- Form 1-K: Annual report (due 120 days after fiscal year-end).
- Form 1-SA: Semi-annual report (due 90 days after mid-year).
- Form 1-U: Current reports for "major events" (CEO change, bankruptcy, etc.).