06 Dec When RegA is Not Your Favorite Music Genre
So when I hear the word “RegA”, I want to start dancing. Not just because it makes me think of Reggae music but because RegA is a new securities regulation that allows businesses more access to capital and it allows every day, retail investors a new opportunity to invest in private, growing companies. Definitely a development worth celebrating – in fact, here’s how to get the party started if you want to learn the steps.
As I mentioned in an earlier article, for the last 80 years the government decided only the wealthy could invest in private companies and enacted rules that blocked us common folk from these potentially high yielding opportunities. A few years ago, those rules changed and the one I am most excited about is called RegA plus. It allows companies to raise up to 50 million dollars – for example, from a company’s own customer base – and on the other side of the equation allows the general public to “get in on the ground floor” as investors in these emerging ventures.
That said, not all RegA+ deals are going to be attractive as an investment. When the new regulations were first rolled out, many companies jumped in to raise capital via this new option and they were pre-revenue companies that were probably too early stage to be a good investment.
Now that RegA+ has been in the market for a while (almost two-and-a-half years) more mature, even cash flow positive companies are using this capital path. Brands such as Chicken Soup for the Soul raised 30 million dollars and Level Brands with model and actress Kathy Ireland raised $12 million so these more robust and well-known entities are beginning to offer their securities to the market. Aside from buying shares in companies, other offerings such as real estate have also started using RegA+ as a way to allow the public to invest in a professionally managed real estate portfolio.
So how can you get in on the action? You can visit some of the top RegA+ platforms such as Wefunder and Start Engine that are bringing these deals to market and perhaps even better, reach out to the leading broker/dealers who are getting involved in the sales process, including those platforms that are associated with them. Generally speaking when a broker/dealer is involved in selling shares, there has been a deeper level of due diligence to evaluate the quality of the offering.
Whether or not you jump into the RegA+ investing game, trust me when I say it is one of the most exciting developments in decades when it comes to leveling the playing field for growing companies seeking capital and for democratizing investments for the 98%.
We can finally get access to better financial returns and innovative investment products previously reserved only for the wealthy.