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What are Tier 1 and Tier 2 Regulation A Plus offerings?

What are Tier 1 versus Tier 2 offerings?

Regulation A Plus allows for two kinds of offerings, Tier 1 and Tier 2. Tier 1 allows companies to raise up to $20 million per year from individual “Main Street” investors, and of course from Angel investors worldwide. It is more difficult to make a Tier 1 offering because the company must satisfy the Blue Sky investing regulations of each state that investors reside in.  We hope that the states will work out an arrangement by which they work together to make the Tier 1 offering more practical. Here is a site that lists the State by State filing requirements so you can check your States out. The other big issue is that some States are very slow to accept filings and some are very demanding and have a high hurdle (like California in particular).

Tier 2 allows companies to raise up to $50 million* per year, and companies using Tier 2 do not need to satisfy any state registration requirements to raise capital. More companies are succeeding with Tier 2.

Manhattan Street Capital can make your Tier 1 offering work for raising capital on our platform by restricting the States according to your plan. We just don't recommend Tier 1 very often.

If you only want to raise money from international investors, or in one or two easy States (check the link above), or more states with more expense on your part, then Tier 1 does offer these advantages:

  • Audited financial statements are not required

  • There is no limit to the amount non-accredited, “Main Street” investors can invest

  • Ongoing reporting to the SEC is not required except for material changes in status of the business

 

*For businesses that can segment their market by geographic regions, it is possible to make multiple simultaneous offerings for one entity.

For example, let's say a company is planning to buy a series of businesses and add value to them for future sale at a profit - Private Equity is a good example. A company can establish say six regions of the US and raise capital for each region simultaneously using a dedicated Reg A+ for each region. In this example, the maximum per year would be 6x50 = $300 million per year.