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04-27-2015 12:21 PM

Thanks David. I am most curious to see how this pans out for non accredited investors. So they comprehend the risks involved in their investments? What are their risk profiles/appetites/tolerance levels? I think the innovation of crowd funding platforms is a cool use of social media technologies for investors, but I wonder what some of the downside issues will be once more of these platforms launch...

TechTalk Blog: New US SEC Reg A+ to Help Small Companies Raise Millions By Using New Technologies

By David Colgren posted 04-21-2015 02:54 PM

  

 

New US SEC Reg A+ to Help Smaller Companies Access Investment Capital via Crowdfunding Using Social Media, Big Data and Cloud Technologies  

On March 25, 2015 the US Securities and Exchange Commission announced that it has adopted rules to facilitate smaller companies' access to capital, as mandated by the JOBS Act approved by Congress and signed into law by the President on April 5, 2012. 

Sums of up to $20 million can be raised in a Tier 1 offering, while up to $50 million can be raised in a Tier 2 offering under the new, updated and expanded Regulation A, known as Reg A+ within a one year period. As adopted, only businesses organized in and have principal place of business in the United States or Canada would be qualified to use Reg A+. 

The overall significance of this new regulation will be that it will permit eligible companies to conduct securities offerings without the onerous requirements of full securities registration.  Smaller companies can now solicit funds from individuals who are not accredited investors.  Companies can now use technologies like the Internet to promote their investment opportunity to any investor. However unaccredited investors will be limited in the amount they can invest in a company using RegA+. Nevertheless, this new regulation opens up a new line of capital by creating an almost "IPO-like" situation that can help smaller companies rapidly grow and hire new employees to meet market demands. Management accountants will play an important role in helping smaller companies to utilize Reg A+.

I wrote an article in the IMA Strategic Finance Magazine about the rise of crowdfunding, social media, Big Data, and Cloud Technologies as a background reference on this topic about a year ago. Crowdfunding is being used actively in other parts of the world by hundreds of thousands of companies very effectively and now smaller companies in the US will have access to this line of investment funding directly from investors using new, innovative technologies. 

Stay tuned for more information from the IMA on this topic.

 

 

 



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