These Companies Raised $1.5 B of Capital Via Reg A+ See The Current Metrics

From June 2015 through the end of 2018, 157 companies raised $1.5 billion of growth capital* via Regulation A+.

Capital raised via Reg A+

2015 (6 months) ~ $100 mill raised

2016 ~ $255 mill raised

2017 ~ $500 mill raised

2018 ~ $660 mill raised

*The actual total is more than we state here because we have only included Tier 1 companies that completed their raise before December 2018. Tier 1 offerings that did not complete are generally not included. We also under-report on Tier 2 offerings that were in process at year-end 2018 but had not completed.

There are three primary segments of companies succeeding with Reg A+. For Tier 2, Real Estate is the largest at 62% of the total of $915 million cumulative; Biotech follows in second place, while banks make up most Tier 1 Reg A+ raises.

70% of companies that filed their Reg A+ succeeded in getting their filing Qualified by the SEC. As of Dec 31st, 2018, of the 366 companies that filed for a Reg A+ offering with the SEC, 262 Qualified.

Of the companies that were Qualified by the SEC, 40% (107 companies) have raised more than $1 million. Of the 262 companies whose offerings have been qualified by the SEC 40% (107 companies) raised more than $1 million.

During calendar 2018, Reg A+ company offerings raised $660 million (averaging $55 million per month across the whole year). The breakdown was $100 million via Tier 1, and $560 million via Tier 2 offerings.

Focusing on the companies that raised more than $1 million, nine Tier 1 companies raised an average of $11.2 million, while 47 Tier 2 companies raised an average of $11.8 million. What are the differences between Tier 1 and Tier 2?

The rate of raising capital via Reg A+ increased by 30% from 2017 to 2018. The capital raising rate as of August 2019 has further increased to $76 million/month. Interactive, clickable video; How to raise capital via Reg A+.

Real estate and REITs

Real Estate has emerged as the largest segment for Reg A+ capital raises to date — accounting for 62% of all the capital raised via Reg A+. How to use Reg A+ for your Real Estate business. The REIT company Fundrise has had the greatest capital formation success in Regulation A+. The company has raised more than $505 million through December 2018 and has Qualified 14 filings through the SEC. Five of their funds have completed Qualification for three raises each in consecutive years (the SEC allows companies to make one Reg A+ offering per 12 month period). Fundrise has raised over 30% of total capital raised via Reg A+ to date.

Why real estate offerings do well with Reg A+

Expansion in the use of Regulation A+ for larger deals

In some cases, the cost and dilution from raising capital can be significantly lower via continuous Reg A+ offerings year-after-year in comparison with VC, Private Equity, or IPO.

Uplisting and secondary offerings for public companies are now allowed using Reg A+

In December 2018 the SEC extended the reach of Reg A+ to include secondary offerings for already-public companies that are current with their SEC reporting obligations. This expansion has the potential to double the scale of the Reg A+ sector. As public companies realize they can use Reg A+ to raise capital more cost-efficiently, we see a substantial increase in activity here.

IPOs via Reg A+

There have been 11 completed Reg A+ IPOs since June of 2017; the most recent being Soliton (SOLY), which listed on the NASDAQ in February 2019. See our list of these IPOs.

The largest Reg A+ IPO to date is that of Chicken Soup for the Soul Entertainment (NASDAQ: CSSE) which raised $30 million in July 2017. Soliton has performed well to date (note my conflict of interest — I have long positions in NASDAQ: SOLY and in NASDAQ: CSSE). It’s worth noting that almost all small IPOs via S-1 and Reg A+ are “Best Efforts” underwritings.

The SEC only allows the use of the Greenshoe in the case of “Full Commit” IPOs where the underwriter takes a real risk. Some of the Reg A+ IPOs would have performed better in the aftermarket had they been able to stabilize their share price via the Greenshoe. The Greenshoe exists as a legitimate way for newly public companies to stabilize their share price in the post-listing period.

How we assess the data in this report

We analyze the SEC Edgar filings for companies that have completed their Reg A+ and those that are in-process. We do this by studying and extracting data from their public 1-K and 1-SA filings. We analyze the reported numbers to calculate the capital raised in each offering. Tier 1 Reg A+ companies are quite simple to measure because they are required to make a filing (the 1-Z) with the SEC when they complete their offering.

Tier 2 companies are not required to file on completion, so they are far more time-consuming to assess. The most recent round of filings had an SEC deadline of April 30th, and they reported on the period ending Dec 31, 2018. Note that assumptions, predictions, and analysis are required to produce the numbers and results I presented here.

Note my conflict of interest

Because I am the founder and CEO of Manhattan Street Capital, which is a funding platform that helps companies raise capital using Reg A+, I have a conflict of interest. Bear that in mind as you read my article. My company benefits from Reg A+ doing well.

All the Best,

Rod Turner

For more about how Reg A+ can help your business grow and raise capital, read on.

Originally published at www.manhattanstreetcapital.com

Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital marketplace for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves and eASIC.

RodTurner@ManhattanStreetCapital.com

www.ManhattanStreetCapital.com

Manhattan Street Capital, 5694 Mission Center Rd, Suite 602–468, San Diego, CA 92108.

Manhattan Street Capital helps raise growth capital for Real Estate projects, Mid-Stage companies, and Mature Startups through Debt and Equity offerings using Regulation A+. Our website platform brings together companies seeking growth equity with prospective investors.

Serial entrepreneur, leader, expert in mergers, scaling up businesses, Reg A+ & IPOs. Optimal health. CEO ManhattanStreetCapital.com