Equity Game Changer – Crowdfunding

by David Mills on June 9, 2015

Global MapWe are living in a time of momentous change that is both exponential in nature and fired with velocity. The intersection of social media (targeted interests), crowdfunding platforms (targeted interests), and now regulatory change will fuel innovation like no other time in history.

CREinFocus (CREi) is delighted to be at this intersection at this stage of our development and growth. We are, in fact, preparing a crowdfunding campaign that has the potential for us to connect with investors, innovators and channel partners that can further transform the corporate real estate marketplace.

LinkedIn GroupsTo illustrate this dynamic we recently did a survey of LinkedIn groups that are engaged in one or more activities related to corporate real estate. You, like most that have seen this chart, will find the numbers staggering. The term ‘big data’ is now a part of our daily jargon, but sometimes we don’t exactly picture how vast this data is – one of the reasons that we believe that Specialized Knowledge Platforms™ like CREi are the business intelligence model of the future.

Capital Attraction, Limitation on Investors, Securities Regulations 6.3.15 Waller Law, Nashville, Tennessee
Later this month, new rules will make it easier for smaller companies to access capital. The new rules, referred to as “Regulation A+, were adopted earlier this year by the Securities and Exchange Commission (“SEC”) to amend and expand the exemption for public offerings afforded by Regulation A under the Securities Act of 1933, as amended (the “Securities Act”), as mandated by the Jumpstart Our Business Startups Act (the “JOBS Act”). Effective June 19, 2015, Regulation A+ provides an exemption for U.S. and Canadian companies that are not required to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to raise up to $50 million within a 12-month period.
The existing Regulation A is rarely used by issuers primarily because of the low offering size limit ($5 million within a 12-month period), the relatively rigorous disclosure requirements, and the requirement to comply with state blue sky laws. But Regulation A+ has the potential to become an important capital raising alternative for small or emerging companies. This bulletin highlights the primary provisions of Regulation A+.
Compared to Rule 506 of Regulation D, Regulation A+ offerings potentially have a broader investor base. Issuers relying on Regulation A+ offerings can sell securities to an unlimited number of non-accredited investors except that non-accredited investors in Tier 2 offerings are subject to an investment limitation. Offerings to non-accredited investors under Tier 2 are limited to no more than 10% of the greater of the investor’s annual income or net worth, if the investor is a natural person, and to no more than 10% of the greater of annual revenue or net assets at fiscal year-end, if the investor is a non-natural person.
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The combination of the amount of funding and unlimited number of non-accredited investors democratizes the investment landscape as never before. Look for more details on this offering in the days and weeks ahead.

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