Take-Away from 24 Hours Spent with Reg A+ Experts – Part 1

During our visit to FinFair in New York City on July 28 and 29 we were able to speak with many of the early adopters in the Reg A+ industry.  There were many topics that were covered and discussed with these Reg A+ experts both in the panel presentations and during casual conversations during the breaks which we will cover in a series of upcoming posts.The first topic we are covering has to do with what types of business are likely to succeed in Reg A+ offering.While there are various ideas of what businesses will succeed, it seems to be generally accepted that B2C (business to consumer) businesses will be best suited for Reg A+ offerings.  Beyond selling direct to a consumer, the businesses that will be best suited are those with a good following on social media.  This is supported by the recent “Testing-the-Waters” success of Elio Motors, which now has over $25M in potential commitments.  The common theme is that a business looking to do a Reg A+ offering should target their current customers and social media followers to promote their offering in the hopes of not just reaching them but their followers as well.With that said, herein lies the great benefit of Reg A+ to both the Company offering securities and the investors buying those securities.  Peter Lynch, the famous fund manager of the Fidelity Magellan Fund is credited with coining the mantra “invest in what you know”.  What consumers know is the products they use.  To this point, TD Ameritrade recently created a product in which a consumer can take a snapshot of a barcode and find out if a public company makes the product  so the consumer can invest in that stock.  So how does that apply to Reg A+?Reg A+ can and will align the products consumers use with the investments they make.  Imagine trying a Chipotle burrito for the first time, before they were a public company and before they were majority owned by McDonald’s. From the first bite you were probably quickly aware of how good the burrito was, how easy and fast it was to order, and how the restaurant could find great success.  Now imagine if you as the consumer had the ability to buy that burrito and at the same time buy a share of their stock.  Reg A+ can essentially create such a situation. Now think of all the great emerging businesses that have gone public over the last many years: Shake Shack, Chipotle, FitBit, GoPro, Yelp, Habit Burger, etc…and think about the rewards the early investors reap.  How great would it have been to been invested in those companies.On the flip-side, there has to be a  benefit to the business besides just the money.  We will cover that in one of our upcoming posts.Although Reg A+ has had a slow start, almost everyone we spoke to expects Reg A+ offerings to pick up as it becomes more mainstream, costs come down, and the process becomes more standardized.