How to Raise Capital with Regulation A+
Entrepreneurship has never been so accessible or encouraged. It seems that everyday there is a new startup popping up, hoping to become a unicorn. Having a great idea and team is the easy part. How do you scale the dream when it takes money to make money? Rich friends, exclusive VC’s, expensive IPOs, is there a better way?
Raising Capital with Regulation A+
The United States government enacted the JOBS Act to help entrepreneurs raise money and make the American dream more attainable. Regulation A+, an update from the previous Regulation A, is a mini-IPO where shares are freely tradable by retail investors from day one. It is not limited to accredited investors and doesn’t have the massive amounts of paperwork etc. of an IPO. Download our complete guide to Raising Capital with Regulation A+ for more information on the process and if Reg A+ is right for you.
How Investor Marketing Can Make or Break a Capital Raise
Reg A+ might seem too good to be true. If it is cheaper and easier than an IPO, why isn’t everyone doing it?
The advantage of an IPO is that it’s normally done through a big bank: JP Morgan, Goldman Sachs, RBC, CIBC etc. The premium paid to the big banks is not only their expertise but their extensive network for marketing. Before a New Issue, they gauge interest from the market and their institutional investor base. Marketing teams and press releases create hype. Shares that aren’t gobbled up by institutional investors get pushed out to their brokers networks. Then the general public gets to buy after the IPO and push the stock price even further.
Download our complete guide to marketing your Reg A+ offering here.
Pitfalls to Avoid When Raising Capital with Regulation A+
With no big bank marketing behind Reg A+ raises, marketing is solely up to the issuer. That means that even if you build it, they might not come. Investors need to know about your Reg A+ raise in order to invest in it. Issuers tend to overlook the importance of and resources that go into investor marketing. Only ⅓ of Reg A+ raises reach their goal amounts. Engaging an investor marketing firm like Plexus Media, could make or break your Reg A+ raise. For more information on how investor marketing supports Regulation A+ raises, click here.
Read about the Top 5 Pitfalls To Avoid When Marketing Your Regulation A+ Raise here.
Testing the Waters Option
There is a way to test whether there is interest for your Reg A+ offering through the Testing the Waters option. Before the SEC accepts your securities application, or it is even submitted, you are able to engage in pre-marketing to mitigate risk. Since a Regulation A+ offering is expensive, this is critical to see if there is any interest from investors. Our Business Development Manager, Manuj Grover, recently spoke about the pros and cons of such a strategy for a better informed decision as it relates to your company, should you desire to raise capital via the Reg A+ vehicle. Listen to it here.
An investor marketing agency such as Plexus can help with the pitch, messaging, and detecting interest in the market. For example, we recently introduced a video analysis solution that uses facial recognition to detect emotion and engagement. Using artificial intelligence and machine learning delivered by the solution, Plexus can validate your messaging and suggest ways to improve the pitch for higher conversion into the investment through our recently launched Video Pitch Analysis solution.
The value of digital marketing is its reach. We use non-traditional tactics to amplify your story online to millions of potential investors. Are you ready to make your Reg A+ raise a success? Reach out about our Regulation A+ investor marketing program at– 1-844-6PLEXUS ext. 108