Aug. 2016

Why Mini-IPOs Will Be Successful

Underwriters continue to smirk at the revolution in raising private capital, but now many are taking notice.


As deal marketers, we have helped issuers complete successful raises, implementing the JOBS Act for private placements. With the new regulations, they actually aren’t so private anymore, but they are still elite, because investors must be able to prove they are accredited—a fancy word to mean rich (disclaimer: We are not lawyers, nor are we broker-dealers, but we work with many of both).

Enter Reg A+, an even newer method of raising capital that has earned its A+ as a wonderful new set of rules, with many burdens removed (reread my disclaimer).

Those disrupted are still in denial; investment banks and VCs continue to look down their noses. They state that the JOBS Act is for “capital of last resort” because they want you to raise money the good old-fashioned way. I’m here to tell you that they are flat out wrong. This is here to stay and I am proud to be in the middle of it!

In their defense, many companies, projects and people have tried to use the new regs to fund deals that everyone else passed on. Every deal requires some form of screening, first by the industry, due diligence by broker-dealers and, of course, by investors. Not every deal that passes diligence is appropriate for investors and we only accept around one of twelve deals we see. Yes, even marketing firms, at least those of us with track records of being part of the capital raising team screen, deals and pass on many, just like VCs and ibanks.

As a marketing firm, we only accept projects where we calculate we can be successful. We know what we can market.

We are in the top of the first inning on Reg A+, or as it’s known, the mini IPO.

How it works (this is not legal or investment banking advice, just my simple way of explaining this in broad strokes) is much simpler than the full IPO. Lawyers, accountants and broker-dealers are still involved, just with smaller invoices and in way less time.
Today, to be successful, one must add marketers with serious capital markets experience. From real estate, to entertainment, to technology, to consumer goods, we are part of a growing ecosystem that is helping to support a new breed of entrepreneurs and build the next generation of capitalism.


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