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Chapters:
- Test market your offering before filing your Reg A+
- When to use Tier 1 and Tier 2 Reg A+
- Should you use email lists?
- Be very careful selecting your Auditor
- Set a low minimum raise amount and a high maximum
- Raise your share price as you progress
- Run your Reg A+ for three years without stopping
Disclaimer:
The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.
MSC is not a law firm, valuation service, underwriter, broker-dealer or Title III crowdfunding portal and we do not engage in any activities requiring any such registration. We do not provide advice on investments. MSC does not structure transactions. Do not interpret any advice from MSC staff as a replacement for advice from service providers in these professions.
Rod Turner
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.
www.ManhattanStreetCapital.com
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.
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So tips for success, you can, I suggested to the SEC in the summer of 2012 that they include what I call crowd audition. A way for people to test market their company online. With, without having done all the filing, without all the audit audit expense and without raising money just to see if there was an enough interest. The SEC chose to adopt that suggestion and they called it test the waters. And then we trademarked a number of interesting treatments of that term cause we were paying attention. So test the waters. You can test market your offering legitimately and relatively inexpensively. So that's what I recommend when you know, it's am ambiguous.
I mean, some companies should absolutely not do a Regulation A+ online raise, others look phenomenally great. And when we're in the gray zone, you know, then I'll suggest doing test awards tier. There's two types of tier of Regulation A+ tier one and tier two. Tier one goes up to 20 million. Tier two starts at zero and goes up to 75 million. Probably 97 or 98% of capital raised in Regulation A+ is tier two. Very few companies can make make tier one work. Well, there's too many expenses dealing with the states getting blue sky permission, which you don't need in tier two. So don't do tier one in, in, unless in exceptional circumstances avoid depending on email lists we have ne never yet seen except for a customer base of active customers. Then of course that email list can be very useful. But buying renting lists and sending out emails, trying to raise money as we have never yet seen that, seen that succeed.
Not to say it cannot, but the, the odds are stacked against it include international, where what you are doing resonates with international folks. They don't get as many great choice opportunities and many people internationally would love to be invested in quality US companies avoid big name auditing firms. Typically companies doing Regulation A+ tend to be smaller. And we've had cases where two things have happened. One is where medium large auditors jacked up the price when it was too late to switch away from them, you have to start the audit process again. We've seen prices traveled or quadruple, so avoiding them avoiding that risk is important using known auditors that won't do that. And the big name auditors, they may engage willingly, but they tend to assign low quality small teams, low quality teams to the audit process. They charged too much. And, and we had one company that was never able to get their company that had an international operation and in the US they were never able to get their Deloitte audit done.
And they, the board ended up canceling their entire Regulation A+ IPO to the NYSE plans for that reason. So be careful with bad dose set, a low minimum raise amount if that's legitimate. So, you know, if you have to buy a big asset, it isn't legitimate, but otherwise setting it low so you can make escrow drawdowns starting early on in the life of the offering and that's commonly done. Setting a higher maximum than you need to give yourself flexibility to raise the amount you, you actually raise without having to requalify, without having to request a change from the SEC. And you can, I touched on this earlier, you can change the evaluation and the share price during your Regulation A+ up to 20% total without requesting permission of the SEC, but by notifying them, and as long as you conduct this change in the correct manner, which obviously we've helped companies do.
So the flexibility and the ability to do that when you do it properly can help market the raise and also reward the earlier risk takers and ha and allow you to change evaluation as you go. If you wanted to double the evaluation, then you would need to pause the offering file only the the share price change, the valuation change. And then typically the SEC will qualify that in a two or three week window because you didn't change anything else. And again, they're not gonna second guess the share price holder valuation. Okay, other things are obvious, marketing is key. You can do it for three years and evergreen strategy is a good thing. You build cumulative brand awareness, which makes ongoing marketing easier
THIS TEXT TRANSCRIPT HAS ERRORS IN IT THAT WERE CAUSED BY THE SPEECH TO TEXT CONVERSION SOFTWARE WE USED. DO NOT DEPEND ON THE TEXT TO BE ACCURATE. WATCH THE RELEVANT PARTS OF THE VIDEO TO MAKE SURE YOU ARE PROPERLY INFORMED. DO NOT DEPEND ON THIS TEXT TRANSCRIPTION TO BE ACCURATE OR REFLECTIVE OF THE STATEMENTS OR INTENT OF THE PRESENTERS.