23 Jul Getting the Reg A Beat Right!

Several recent articles are suggesting that “the jury is still out” on whether Regulation A+ will indeed usher in a new era of small, cost-effective IPOs. We all knew there would be, as my late sailor father used to say, a shakedown cruise as with anything new. We try some things, some work and some don’t.

Here are the situations where I think Regulation A+ has the greatest chance to succeed. First, when you bring your own crowd to the party. Elio Motors had tens of thousands of pre-orders for their product, and those customers provided most of the funding for their IPO. Second, I believe more classic broker-dealer led semi-traditional offerings, but including an online component, also have a greater chance of being completed.

These offerings are quicker and much cheaper, include a streamlined SEC review and full test the waters capability. There’s no reason NOT to use Reg A for an IPO seeking up to $50 million. We already know, thanks to The Deal, of one billionaire seriously contemplating a fund to invest in these deals. Let’s see what the Wall Street Journal says a year from now!