Regulation A+ Explained for Growing Companies
Regulation A+ lets a US company raise money from the general public, not just wealthy investors, in a way that sits between a small crowdfunding campaign and a full IPO. It can be a powerful option for growing companies with loyal customers and a story people want to back. It is also a serious undertaking. This explainer walks through how Regulation A+ works, the two tiers, the real effort involved and how to judge whether your company is ready.
Key takeaways
- Regulation A+ is a US exemption that lets companies raise from the public after the SEC qualifies their offering.
- Tier 1 allows up to $20 million and Tier 2 up to $75 million in a 12-month period. Check current rules before you plan.
- It sits between Regulation Crowdfunding (up to $5 million in 12 months through funding portals) and a traditional IPO.
- Expect months of preparation, legal and accounting work, marketing effort and ongoing obligations after the raise.
- It suits companies with a strong community, a clear story and the capacity to handle many small shareholders.
Most founders think of fundraising as a small number of meetings with angels or venture funds. Regulation A+ flips that picture. Instead of convincing a handful of professionals, you invite thousands of customers, fans and everyday investors to buy shares. That can build both capital and loyalty at the same time.
A quick but important note: this article is general information about US securities rules, not legal, tax or investment advice. Securities law is technical and the rules can change. If you are considering a Regulation A+ offering, work with a securities lawyer and an accountant who have handled one before, and check the SEC's current guidance.
What Regulation A+ is
In the US, any offer of shares to investors has to be either registered with the Securities and Exchange Commission (SEC) or fit an exemption. A full registration, as in an IPO, is expensive and demanding. Regulation A, expanded in recent years and often called Regulation A+, is an exemption that lets companies sell securities to the public with a lighter, though still substantial, process.
The key idea is SEC qualification. You prepare an offering statement that describes your business, risks, management, financials and the terms of the securities. The SEC reviews it, may send comments, and once it is qualified you can sell under its terms. Until then, you can generally gauge interest but cannot accept money.
Tier 1 vs Tier 2
Regulation A+ has two tiers. They differ in how much you can raise and in the obligations that come with each. The broad differences are below; the exact requirements are set by the SEC and can change, so confirm the details with your lawyer.
Tier 1
Tier 1 allows up to $20 million in a 12-month period. It generally involves review by state securities regulators as well as the SEC, which can add time and complexity if you want to sell in many states. Ongoing reporting after the offering is lighter than Tier 2.
Tier 2
Tier 2 allows up to $75 million in a 12-month period. It comes with more demanding requirements, including audited financial statements and regular ongoing reports, and there are rules on how much some investors can put in. In exchange, it avoids much of the separate state-by-state review, which is why many companies choose it.
| Regulation Crowdfunding | Regulation A+ Tier 1 | Regulation A+ Tier 2 | |
|---|---|---|---|
| Maximum in 12 months | $5 million | $20 million | $75 million |
| How you sell | Through a registered funding portal | Directly or with intermediaries, after SEC qualification | Directly or with intermediaries, after SEC qualification |
| Regulatory review | Filing with the SEC, lighter process | SEC plus state regulators | SEC, with less separate state review |
| Ongoing obligations | Annual reporting | Lighter | Regular reports and audited financials |
Treat this table as a starting point for a conversation with your advisers, not a compliance checklist.
How Regulation A+ compares with other options
It helps to place Regulation A+ alongside the routes you may already know.
- Private rounds with angels or VCs: faster, fewer investors, and usually limited to accredited investors. Most US venture investors expect a Delaware C-Corp with preferred stock, and they negotiate terms directly with you.
- Regulation Crowdfunding: raises up to $5 million in 12 months through registered funding portals. Platforms such as Wefunder, StartEngine and Republic host these campaigns, and some also support Regulation A+ offerings. Crowdfunding is often a sensible first step to test community demand.
- Rewards crowdfunding: platforms such as Kickstarter and Indiegogo pre-sell products without selling equity. Useful for consumer products, but not a share offering.
- A traditional IPO: far larger scale, a stock exchange listing and much heavier ongoing obligations.
Outside the US, rules are different. In the UK, for example, Crowdcube runs equity crowdfunding under the UK regime, which is separate from Regulation A+.
Common mistake
Treating Regulation A+ as "crowdfunding, but bigger." It is closer to a mini public offering. The disclosure, financial statements, marketing rules and investor relations work are on a different level from a typical crowdfunding campaign, so budget your time and team accordingly.
Who Regulation A+ suits
Regulation A+ is not right for most early startups. It tends to work best for companies with a few specific traits.
- A loyal community. Consumer brands, food and drink companies, games, sports and local businesses with passionate customers often do well, because those customers become investors.
- A clear, simple story. Everyday investors need to understand what you do and why it matters in a minute or two.
- Some track record. Revenue, customers or a working product make the offering credible and help with the disclosure process.
- Clean records. Organized corporate documents, a tidy cap table and financial statements that can be reviewed or audited.
- Capacity for investor relations. Thousands of small shareholders means questions, updates and annual meetings. Someone needs to own that work.
The Regulation A+ process, step by step
Every offering is different, but most follow a similar path. Timelines vary widely, so plan for several months from first conversation to first dollar.
- Decide whether it fits. Compare Regulation A+ with private rounds and crowdfunding. Talk to founders who have done it and ask what surprised them.
- Assemble your team. A securities lawyer, an accountant or auditor, and often a platform or broker-dealer to help with the offering and investor processing.
- Clean up the company. Corporate structure, cap table, contracts, IP assignments, board minutes and policies all need to be in order. If you have a data room from a past round, it is a good start.
- Prepare financial statements. Depending on the tier, these may need to be audited. This step often takes longer than founders expect.
- Draft the offering statement. Describe the business, risks, use of funds, management, compensation and the securities on offer. Be clear and honest; this document is the basis of what you can say publicly.
- Test the waters, carefully. The rules allow companies to gauge interest before qualification, within limits. Your lawyer should approve materials before anything goes out.
- File and respond to SEC comments. Expect questions and revisions. Keep your team available to respond quickly.
- Launch after qualification. Open the offering, run your marketing campaign and process investments.
- Close and report. Issue shares, update your cap table and meet ongoing reporting duties for your tier.
Pro tip
Build your community before you file, not after. An email list, an engaged social following and a group of customers who already love you make the campaign far easier. Remember that US CAN-SPAM rules require a clear unsubscribe option and a valid physical postal address in commercial emails.
Costs, effort and ongoing obligations
Regulation A+ is not cheap, even before you count your own time. Rather than rely on general figures, ask your advisers for written estimates based on your company. The main cost areas usually include:
- Legal fees for structuring, drafting and SEC review.
- Accounting and audit fees for financial statements.
- Platform or broker-dealer fees, which may be fixed, percentage based or both.
- Marketing spend on ads, video, content and events to reach investors.
- Investor relations and transfer agent costs to manage many shareholders.
- Ongoing reporting after the raise, which continues for as long as the rules require.
A Regulation A+ readiness template
Use this table to score your readiness honestly before you spend money on advisers. The ratings below are made up for illustration only.
| Area | What "ready" looks like | Example status | Next action |
|---|---|---|---|
| Community | Engaged customers and an email list who would consider investing | Partly ready | Run a short interest survey of customers |
| Financials | Clean books that can be reviewed or audited | Not ready | Ask accountant for audit timeline and quote |
| Corporate records | Tidy cap table, signed IP assignments, board minutes | Ready | Update data room index |
Hypothetical example
Imagine a craft beverage company with three locations, steady revenue and a large, enthusiastic customer list. The founders want to open two more sites and like the idea of customers owning a piece of the brand. They start with a Regulation Crowdfunding campaign to test demand and learn the basics of investor communication. It succeeds, so a year later they hire a securities lawyer and auditor and begin preparing a Tier 2 offering. By then they already know their community will show up, and their records are in good shape.
Risks and trade-offs to weigh
- Public disclosure: competitors can read your financials, plans and risks.
- Many shareholders: communication, voting and future rounds become more complex. Discuss how this affects later venture investment or an acquisition.
- Marketing risk: qualification does not guarantee anyone invests. Some offerings raise far less than planned.
- Liability: statements in your offering and marketing must be accurate. Overpromising can create legal exposure.
- Liquidity expectations: investors may expect a way to sell shares eventually. Be honest about how and when that might happen.
Your Regulation A+ readiness checklist
- Compare Regulation A+ with private rounds and Regulation Crowdfunding
- Fill in the readiness template honestly
- Talk to at least two founders who have run an offering
- Get written quotes from a securities lawyer and an auditor
- Clean up your cap table, contracts and corporate records
- Grow and warm up your community before filing
- Assign one person to own investor relations after the raise
Frequently asked questions
Can non-accredited investors buy shares in a Regulation A+ offering?
Yes, that is one of its main attractions. There are rules on how much some investors can invest, particularly in Tier 2, so check the current limits with your lawyer.
Can a UK or European company use Regulation A+?
Eligibility rules apply, and many non-US companies would need a US entity or structure to use it. Ask a US securities lawyer before planning around it, and consider local options in your own country.
How long does a Regulation A+ offering take?
It varies with your readiness, the tier and how quickly you respond to SEC comments. Plan for several months of preparation and review before you can accept investments, plus the campaign period itself.
Does Regulation A+ list my shares on a stock exchange?
Not automatically. Some companies pursue a listing alongside a Tier 2 offering, but that involves extra requirements. Many offerings leave shares unlisted, which affects how easily investors can sell.
Related reading
The bottom line
Regulation A+ lets growing US companies raise up to $20 million under Tier 1 or $75 million under Tier 2 in a 12-month period from the public, after SEC qualification. It can turn customers into owners and fund real growth, but it demands clean records, solid financials, a strong community and ongoing reporting.
If you are curious, start with the readiness template, talk to founders who have done it and get proper quotes from experienced advisers. Whether you go ahead or not, the preparation will leave your company in better shape for any future raise.
