The legislation should be passed in June and Crowdfundraiser have already had several companies who’ve expressed an interest in raising funds under these new regulations. Each company is looking to raise the maximum amount from the offering at $50 million. The platform will be prepared to provide Form 1-A filing and audit solutions for businesses looking to perform Tier 2 Regulation A+ crowdfunding.
Jake Durrant, Managing Director of Crowdfundraiser, commented:
“We’re already seeing a great deal of interest in Regulation A+ offerings, but we’re being very selective on the types of companies and operators with whom we’re engaging.”
The legislation confines the type, size and structure of each deal and company and so there is a very narrow definition of the businesses Crowdfundraiser can work with. Also the platform intends for the companies they list to have a high probability of being fully subscribed.
Durrant continued:
“While we have the ability to scale our processes, we would prefer to work with the highest quality deals we can. Doing so increases the probability of success and creates the best situation for both investors and entrepreneurs alike.”
Crowdfundraiser is intent on only providing services for companies looking to do Tier 2 offerings with Regulation A+.
Durrant added:
“We feel Tier 1 Reg A offerings are not only too small, but are almost a non-starter due to the fact that Tier 1 offers don’t preempt the state Blue Sky Laws. This may pigeonhole us somewhat, but it helps define where we’ll play and where we won’t.”
At the end of March the SEC voted to change the rules around crowdfunding. They implemented Title IV of the JOBS Act, Regulation A+. This new regulation has been called “IPO Lite” as it allows companies to raise up to $50 million in a 12 month period, but there are a lot of additional reporting requirements for the company. Businesses will be subject to annual audits, semi-annual updates and reporting on other material events. Also, non-accredited investors can now participate in these fund raising rounds. In order to raise funds under Title IV platforms have to be a registered broker-dealer (or affiliated with a broker-dealer) and file with FINRA, as well as having a certain level of net capital.
These new rules should become effective by mid-June 2015. And it is likely that we will see more equity crowdfunding platforms positioning themselves ready to take advantage of the new legislation.
