Is your Company ready to raise anywhere from $10-$75 million in a “Mini-IPO?”

TLDR: Reg A allows companies to conduct public offerings to both accredited AND non-accredited investors.  Companies can raise up to $75 million in a 12-month period.  The reporting obligations are streamlined compared to a public offering on a national exchange but have meaningful compliance standards. Reg A is currently being effectively used by real estate organizations such as Cardone and Arrived, startups in many different industries, and companies who can access their large social media presences to solicit potential investors.  Investors receive unrestricted stock.

Overview of Regulation A

When a company offers or sells a share or unit of equity that offering/transaction must be registered with the SEC or fit within an exemption, such as Reg A.

Companies seeking to use Reg A must file an offering statement on Form 1‑A with the SEC and obtain qualification before sales, but the process is streamlined relative to a traditional registration statement. Regulation A permits general solicitation, for example you can market to your potential investors through website, YouTube, and LinkedIn profiles.  Further, Reg A allows participation by non‑accredited investors.

Tier 1 and Tier 2 structure

Companies must select between the Tier 1 and Tier 2 Reg A structure.  Tier 1 offerings are limited to $20 million per 12-month period.  Tier 2 offerings can seek up to $75 million in a 12-month period and financial statements must be audited.

Key Benefits for Companies

• Access to retail capital 
  Regulation A allows sales to both accredited and non‑accredited investors, significantly expanding the potential investor base beyond what is available under many private placement exemptions.
• Public marketing and “mini‑IPO” positioning 
  Offerings may be broadly advertised, including online and via social media, which can function as both capital raising and brand‑building exercises.
• Reduced regulatory burden compared to a full IPO 
  The Form 1‑A regime and scaled disclosure are less costly and complex than a traditional registration statement, even though still substantial.
• State law preemption for Tier 2 
  Tier 2 offerings benefit from federal preemption of state Blue Sky registration, simplifying multi‑state raises and reducing timing and cost frictions.
• Potential for investor liquidity 
  Regulation A securities are generally not “restricted,” so issuers may seek OTC quotation or exchange listing, offering at least the possibility of secondary market liquidity.
• Costs of the offering can be recouped by the offering proceeds
  Startups can initiate a Reg A offering with loans from the founders.  Costs associated with the offering, such as legal costs, audit fees, and marketing fees, can be recouped through the offering proceeds.

Key Considerations for Companies

• Offering and ongoing costs
  Reg A offerings still require securities counsel, preparation and SEC review of Form 1‑A, and for Tier 2 issuers, audited financials and ongoing annual, semiannual, and current reports, all of which increase operating expenses.
• State law compliance for Tier 1
  Because Tier 1 lacks Blue Sky preemption, issuers must register or qualify the offering in each state where securities are sold, which is time‑consuming and costly and can undermine the economics of smaller, multi‑state raises.
• Execution and marketing risk
  Successful Reg A capital raises often depend on sophisticated digital marketing and investor acquisition strategies, and many offerings fail to meet minimum targets despite incurring fixed legal and preparation costs.
• Companies are subject to bad actor disqualifications
  An offering can be disqualified if a “covered person” associated with the Company has experienced a disqualifying event such as a conviction for specified laws.

From a legal‑risk perspective, Reg A offerings are subject to all federal anti‑fraud liability applicable to public offerings, so disclosures must be accurate and balanced.

The attorneys at JWL International are veterans at advising clients through the Reg A fundraising and process.

Conn Flanigan is a seasoned corporate and securities attorney with more than 20 years of experience advising private equity groups, real estate investment companies, and entrepreneurs on complex transactions, capital markets, and corporate governance matters. With deep expertise spanning securities offerings, real estate acquisitions, fund formation, and financing, Mr. Flanigan brings a practical, business-minded approach to legal strategy that supports growth, compliance, and long-term value creation.

Throughout his career, Mr. Flanigan has served in senior in-house roles, including General Counsel to multiple real estate investment trusts (REITs). From 2013 to 2017, he served as Secretary and General Counsel for Global Medical REIT, Inc. (NYSE:GMRE) advising the REIT from its startup, through 18 acquisitions of healthcare facilities worth more than $250 million, and through its IPO on the NYSE in 2016.

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