An Initial Public Offering (IPO) is when a private company goes public and issues shares on a stock exchange to retail investors. This is the main capital raising strategy for companies looking to scale.
A Reg A+ offering issues shares to retail investors, so is considered to be a mini-IPO or a substitute to traditional capital markets. Yet, in a Reg A+ offering, the company remains private. Read more about Regulation A+ here.
Pro’s & Con’s of an IPO
| Pro’s | Con’s |
| – Big bank marketing – Liquidity, easily tradable on an exchange from day 1 – Credibility | – Expensive – Lots of paperwork and lawyers – Ongoing regulatory requirements |
Pro’s & Con’s of Reg A+
| Pro’s | Con’s |
| – Cheaper, quicker and less paperwork than IPO – More companies are eligible | – Responsible for own marketing – Not all companies list on exchange, not as much liquidity |
The biggest pitfall of Regulation A+ that most companies don’t understand is that it is solely up to the issuer to market a Regulation A+ offering. If you want investors, they need to know about your offering! Only ⅓ of Reg A+ capital raises reach their goal amounts.
Start your raise off right and read about the Reg A+ Marketing best practices.
