In 2012, Congress passed the Jumpstart Our Business Startups (JOBS) Act, aimed to facilitate capital formation and promote job creation by reducing regulatory requirements for certain types of companies, easing access to capital markets, and encouraging crowdfunding and small business investments. Specifically, the Regulation A+ (Reg A) qualification is a securities regulation implemented by the U.S. Securities and Exchange Commission (SEC) to facilitate capital raising for small and medium-sized companies. Not only does Reg A open capital markets to small and medium businesses, it enables individuals to invest in exciting new companies and business models.
The JOBS Act democratizes the world of private equity so small businesses and retail investors can benefit from the same tools traditionally only accessible to wealthy individuals and large companies.
Regulation A+ (Reg A) has stimulated numerous successful businesses since the JOBS Act passed. Below are some great examples:
1. Elio Motors:
Elio Motors launched a Regulation A+ crowdfunding campaign to raise funds for their innovative three-wheeled vehicle. Through a combination of targeted digital marketing, social media engagement, and community building, they successfully raised over $17 million from individual investors.
2. Legion M:
Legion M, a fan-owned entertainment company, utilized Regulation A to allow fans to invest in Hollywood projects. They leveraged their passionate fan base, organized local meetups, and utilized social media influencers to generate buzz. This approach helped them raise $7.5 million and paved the way for fans to have a voice in the entertainment industry.
Fundrise is a real estate crowdfunding platform that utilized Regulation A to democratize real estate investing. With a strong digital marketing strategy, they effectively communicated their value proposition to potential investors, enabling them to raise millions of dollars and disrupt the traditional real estate industry.
XY – The Persistent Company, known for their “Findables” technology, launched a Regulation A+ campaign to fund the development and production of their XY4+ tracking device. They engaged with their existing customer base, created compelling video content, and used social media platforms to raise over $2.4 million.
Med-X, a cannabis-based consumer products company, used Regulation A+ to raise capital for research and development, as well as marketing and distribution. Through targeted advertising, educational content, and industry partnerships, they successfully raised over $1.7 million, leveraging the growing interest in the cannabis market.
Investors can discover Regulation A investment opportunities through crowdfunding platforms like StartEngine and Republic, or from social media, a Google search, and investor groups. It’s important to conduct thorough due diligence before investing in any Regulation A offering. Reviewing the offering documents, understanding the company’s business model, evaluating the risks, and consulting with financial professionals can help individuals make informed investment decisions.