Regulation A+ is a Securities and Exchange Commission exemption that enables companies to raise up to $75 million in a 12-month period from both accredited and non-accredited investors through a streamlined registration process. Often referred to as a "mini-IPO," this fundraising mechanism allows smaller companies to access public capital markets without the extensive compliance requirements and costs associated with a traditional initial public offering.
The regulation divides offerings into two tiers: Tier 1 permits companies to raise up to $20 million, while Tier 2 allows fundraising up to $75 million. Tier 2 offerings provide significant advantages, including federal preemption of state securities laws (known as "blue sky" laws) and the ability to list shares on national exchanges. Companies pursuing Tier 2 must undergo audited financial statements and provide ongoing reporting to the SEC, though these requirements remain less burdensome than full registration under the Securities Act of 1933.
Why It Matters
For angel investors, Regulation A+ represents a democratization of early-stage investing opportunities previously limited to venture capital firms and wealthy individuals. The exemption allows portfolio companies to raise substantial growth capital while maintaining more favorable terms than traditional IPOs, which typically require $50 million to $100 million in legal and underwriting fees. Companies can test market interest through qualification rather than registration, reducing risk and timeline uncertainty while providing investors with more liquid securities through potential exchange listings.
Example
A craft beverage company with $15 million in annual revenue needs $30 million to expand distribution nationally. Rather than pursuing venture capital that would demand significant equity and board control, the company launches a Tier 2 Regulation A+ offering at $12 per share. Through an online platform, they raise $28 million from 4,500 investors, including existing angel backers who increase their positions. The shares become tradable on a national exchange six months after closing, providing early investors with potential liquidity. The company spends approximately $500,000 on legal and audit costs—far less than a traditional IPO while achieving similar capital raising goals.