There’s an emerging space in the world of investments that many private businesses and investors know very little about. Yet it presents both with significant opportunities that were previously unavailable. It’s called Regulation A+ (or Reg A+ for short) and it allows small businesses and startups to offer shares of their companies to retail investors.
Think of it as an IPO alternative, or as an evolved form of crowdfunding (one that’s regulated by the US Securities and Exchange Commission, aka SEC). Either way, Reg A+ allows small private businesses to raise capital from the retail investment crowd in addition to accredited investors.
While you might be hard-pressed to find many broker-dealers offering Reg A+ shares by way of an online search, even less so by word-of-mouth, the Dalmore Group is rapidly emerging as one of the most prominent leaders in the industry.
In May, the veteran broker-dealer surpassed one million Reg A+ investments and has onboarded over 210 Reg A+ clients to date. It currently has over $3.6B in live Reg A+ offerings and another $4.3B in the pipeline.
Who is the Dalmore Group?
The Dalmore Group is a broker-dealer that specializes in helping companies raise capital online through Regulations A+, CF, and D offerings. This can be a handful, so let’s break it down.
Regs A+, CF, and D are different forms of regulated crowdfunding. The difference between the various regs is in the amount of capital a company can raise, whether funding is limited to accredited investors or open to smaller non-accredited investors, and the amount of reporting a company must submit to regulators.
In addition to its broker-dealer services, Dalmore also helps businesses set up company-specific platforms through which businesses can raise capital. To date, it has onboarded over 210 clients, including Gage Cannabis $50M, Emerald Health Pharmaceuticals $45M+, Flora Growth $29.5M+, Draganfly 19M+, Juva Life $18M, and WINC Inc. $11.5M+, Brazil Potash $37M+, Miso Robotics $36M+, Cloudastructure $32M+, Aptera Motors $34M+, Boxable $25M+, Ei.Ventures $21.6M+, Arrived $11.9M+,Legion Works $10.8M+, Tropical Racing $11M+, Graze, Inc. $8M+, and many others.
Dalmore also helps facilitate trades on the secondary market, having executed over one hundred thousand secondary trades to date. Not only does the firm offer shares of Reg A+ offerings, but it also facilitates “fractional shares” of assets that otherwise may be cost-prohibitive to most investors in the retail space.
Overall, the Reg A+ space is a form of financial “democratization” that expands investment opportunities to the smaller business and retail crowds on Main Street.
What Reg A+ Means for Businesses and Investors
Reg A+ Title IV of the JOBS Act went into effect in 2015. As a landmark piece of legislation that opened up new possibilities for small private businesses and investors, Reg A+ crowdfunding opportunities are divided into two tiers.
Tier 1 allows businesses to issue offerings up to $20 million in a twelve-month period. Tier 2 allows issuances of offerings up to $75 million in the same time period. Reg A+ also allows these businesses to publicly promote their offerings to retail and accredited investors alike.
Investors can potentially benefit from the opportunity of having another diversified return source to add to their portfolios. And with the help of firms like the Dalmore Group, smaller investors can purchase fractional shares of Reg A+ offerings on the secondary market.
Why Would a Business Consider a Reg A+ Offering?
Reg A+ is most suitable for small businesses looking to raise between $3 million to $75 million. Aside from the need to raise capital, there are other significant benefits to issuing Reg A+ shares.
For a business that has a strong customer or follower base, a Reg A+ offering gives loyal clients and fans the opportunity to support the business in exchange for potential financial rewards. This can help encourage business growth as brand loyalists turned brand ambassadors are more likely to refer business to a company in which they now have a stake.
In addition, businesses have the capacity to publicize their Reg A+ offerings directly on their website through the use of a platform. This allows companies to engage their clients and followers directly; a plus if a company is able to garner strong web traffic to its site.
Similar to an IPO, businesses can use Reg A+ to help generate widespread publicity for their brand and products. Think of it as a product launch. Every launch presents a significant marketing opportunity that, if done properly, can help a lesser-known company make a bigger splash.
But as with all emerging opportunities, the process comes with its own share of unique complexities. And that’s where professional guidance can play a critical role.
The Bottom Line
The regulated crowdfunding space presents a tremendous opportunity for businesses and investors alike. Yet it’s also rife with operational challenges. Companies that are new to raising capital online can benefit from the guidance of a firm that knows the ins and outs of this specific industry segment.
Think of the Dalmore Group as a “one-stop-shop” in the Reg A+, D, and CF space. Its industry prominence and unparalleled experience make it one of the most reliable firms in the regulated crowdfunding industry. If you’re considering the option of a Reg A+ offering, we welcome the opportunity to discuss how we can help you pursue your capital raising needs.