What is Reg A+ (which Elon musk keeps talking about)?

If a business or a company wants to raise capital from the public (individual investors or angel investors), it needs to adhere to a set of laws and regulations administered by U.S. Securities And Exchange Commission (S.E.C.) as well as the State Securities Division within the state where the investor(s) reside. It is illegal to raise capital from the public unless you adhere to the securities laws and regulations. There are however, under certain circumstances, whereby you have exemptions, for instance an exemption from registration of the securities (shares/stocks) of the business/company that is sold publically.

Regulation A is an exemption from registration for public offerings. You can read more about this at the S.E.C. website.

Every state has its own securities act, covering at least disclosure and merit review, in addition to the federal regulations (S.E.C.). Disclosure laws generally require companies to fully and fairly disclose all material facts relating to an offering. Merit review laws regulate disclosure and the substantive merits and fairness of the securities offering to investors and/or their representatives. Some states perform merit reviews independently to determine fairness.

When did the Reg A+ start?

On March 25, 2015, the S.E.C. adopted final rules to implement Section 401 of the "Jumpstart Our Business Startups Act" by expanding Regulation A into two tiers.

Tier 1, for securities offerings of up to $20 million in a 12-month period
Tier 2, for securities offerings of up to $75 million in a 12-month period

A business/company can issue $20 million or less of securities (shares/stock of their company) for sale to potential investors utilizing Tier 1 or up to $75 million with Tier 2. The new Reg A+ modernizes the Regulation A filing process for all offerings and creates additional flexibility for issuers in the offering process. Tier 2 issuers are required to include audited financial statements in their offering documents and to file annual, semiannual, and current reports with the SEC on an ongoing basis. As of March 15th, 2021, businesses can use Tier 2 to raise up to $75 million in capital within a 12-month period.

Nonaccredited Investors

Regulation A allows the general public to invest in private companies. With the exception of securities that will be listed on a national securities exchange upon qualification, purchasers in Tier 2 offerings must either be accredited investors, as that term is defined in Regulation D (SEC), or be subject to certain limitations on the size of their investment.

Tier 1

In addition to qualifying a Regulation A offering with the SEC, companies using a Tier 1 offering must register or qualify their offering in any state in which they seek to offer or sell securities pursuant to Regulation A. Some states provide the option to have Tier 1 offerings that will be conducted in multiple states reviewed through a coordinated state review program by the North American Securities Administrators Association. Additionally some states require audited financial statement, even though at federal level (S.E.C.) does not require audited books for the offering.

Tier 2

Issuers in Tier 2 offerings are required to qualify offerings with the S.E.C. before sales can be made pursuant to Regulation A, but they are not required to register or qualify their offerings with state securities regulators. This partially exempts Tier 2 companies from blue sky law securities rules in each state. Tier 2 offerings by such issuers do remain subject to some state law enforcement and antifraud rules. Issuers in Tier 2 offerings may still be subject to filing fees in the states in which they intend to offer securities.

Why USE Reg A+ to raise funds For Your Business?

So the answer to the question regarding "Why Reg A+", simply is: it is much easier, more flexible, quicker and dramatically improves the funding prospects for your company, without being tied down and controlled by Venture Capital firms, or spending $100,000s of Dollars just to do a funding to raise a few million Dollars. In fact, Reg A+ is much more cost-effective than standard S1 IPO (the ones you usually hear about on the news).

This funding vehicle (method) allowed through S.E.C. regulations makes it substantially easier and more cost-effective to raise capital for a business. Once, you qualify and adhere to the set regulations, you can advertise directly to the public (which is usually unheard of with other funding methods such as Regulation D, or Reg D). You can offer your stocks on an exchange, or you can retain the control of your business since the stocks/shares offered are considered liquid by the S.E.C. amd there is no lockup period unless you impose a lockup for your company, and raise funds but not go completely onto an exchange for trading.

Hence why this type of funding vehicle is called "Direct IPO", without the use of marketmakers, broker listings, and underwriters who often charge an arm and leg.

Reg A+ is also called a Direct Public Offering. Which means investors can sell their shares under the S.E.C. rules and regulations. This offers liqudity for company directors, affiliates shareholders, and investors.

How can I raise money through Direct IPO Reg A+?

This is the best part of Direct IPO Offering under Reg A+ regulation/exemption:

- You can advertise your company's stock offering and raise capital globally.

This is HUGE. An incredible benefit for a company that wishes to raise capital.

How much can i raise for my business?

You can raise up to $20 million in a 12-month period undert Tier 1 offering and under Tier 2, for offerings of up to $75 million in a 12-month period. For offerings of up to $20 million, companies can elect to proceed under the requirements for either Tier 1 or Tier 2.

Tier 1
  • Can advertise publically to raise capital
  • You can raise up to $20 million
  • No need to have audited financial report * (standard financial report is sufficient)
  • Must statisfy/register with each state when you obtain an investor
    • *Called Blue Sky law, and the state MAY require audit of financial report
  • No limit on investment amount (ideally sophisticared investor)
Tier 2
  • Can advertise publically to raise capital
  • You can raise up to $75 million
  • Must have audited financial report
  • Anyone can invest globally
    • Non-accredited investors are limited to 10% of income/net worth per year
    • No limits on accredited investors
  • No state registration required (Blue Sky law doesn't apply)


  1. 10-days overall planning and preparations
  2. 15-30-days audit of existing company books
  3. 60-days (can vary) marketing, content development, prospecting
    • 10-days offering/prospectus preparation
    • Concurrently develop ad/creative content
    • Offering pitch, video, PR, graphics
    • Social media accounts, advertising
  4. Prospecting, setting appointments, and presentations to potential investors
  5. SEC Qualify filing and the company go live to investors

With good planning, team work, focus, we have done an entire Reg A funding from beginning to the end in as little as 3 months.

  1. Audit depends on size of company, about $15K for a small company
  2. Legal fees depend on who much work can be done internally (as much as $10K)
  3. Marketing can be the most expensive (as much as $50K or more)
    • $50K for funds as much as $2M-$5M
    • $100K for funds as much as $8M-20M
  4. S.E.C. and State Securities filing (as much as $5K)

    In our experience cost may vary, sometimes drastially, based on the team conducting the offering. A smart frugal team knows how to get an audit done, do marketing of the offering, and keep costs down to a minimum. It's best to get an experienced consultant.