How Regulation A+ Lets Private Companies Raise Up to $75 Million From Retail Investors
A middle ground between venture capital and traditional IPOs, Reg A+ lets companies tap public markets without full SEC registration. Here's how it works.
Regulation A+ is a capital-raising pathway that sits between venture funding and a traditional initial public offering. It allows private companies to sell securities to the public—including everyday retail investors—without the full cost and regulatory burden of listing on a major exchange. The exemption has grown into a meaningful, if volatile, alternative for founders seeking to avoid venture capital's requirements for explosive growth, while stepping short of an IPO's complexity.
The Securities and Exchange Commission has since raised the annual cap for larger offerings to $75 million from $50 million. For dealmakers and founders evaluating how to fund the next stage of growth, understanding Regulation A+ requires knowing its tiers, the disclosure process, and why most companies that attempt it do not fully deploy their authorized capital.
Two tiers with different requirements
Regulation A+ divides into two classes. Tier 1 permits offerings of up to $20 million in a 12-month period; Tier 2 permits up to $75 million. Companies raising up to $20 million can choose either tier. The division determines what disclosures are required and what happens after the offering closes.
Tier 1 offerings need not include audited financial statements unless the company has already prepared them for another purpose. Tier 1 issuers file an offering statement on Form 1-A with the SEC but have no obligation to file ongoing reports after the offering concludes, beyond a single exit report.
Tier 2 carries heavier requirements. Companies must provide audited financial statements prepared in accordance with U.S. Generally Accepted Auditing Standards or the Public Company Accounting Oversight Board's standards. After the offering closes, Tier 2 issuers become subject to continuous SEC reporting: annual reports, semiannual reports, and current event reports filed within four business days of material developments. Non-accredited investors in Tier 2 offerings also face investment limits tied to their income and net worth—they may invest no more than 10 percent of whichever is greater, their annual income or net worth, in the offering.
Both tiers require that companies be organized and principally based in the U.S. or Canada. Investment companies, business development companies, special purpose acquisition companies, and issuers subject to SEC disqualifications for bad-actor conduct cannot use the exemption.
The filing process and timeline
Companies file their offering statement on Form 1-A electronically through the SEC's EDGAR system. The form includes both the offering document itself and financial statements. Before the formal filing, companies whose securities have not previously been sold under Regulation A may submit a draft offering statement for confidential staff review—a preview that can catch issues early.
Once the company decides to proceed with a public filing, the draft becomes available on EDGAR, and the statement must remain publicly posted for at least 21 calendar days before the offering can qualify for sale.
Why companies choose it over venture capital or IPOs
Regulation A+ attracts founders who have outgrown venture capital's appetite for rapid expansion and high returns but are not ready to assume the public company compliance burden.
Compared to a traditional IPO, Regulation A+ cuts both the absolute cost and the performance pressure. Companies raising capital through Reg A+ pay a fraction of what investment banks, underwriters, and lawyers charge for a public listing. And while Tier 2 issuers must file annual and semiannual reports, their ongoing disclosure obligations remain lighter than those of full SEC-registered public companies.
The tradeoff is liquidity. While Regulation A+ shares are freely transferable in theory, a very small secondary market exists in practice. Investors cannot rely on the deep trading volume and price discovery of a major exchange. For some issuers—particularly real estate companies or financial services firms seeking to raise from a specific pool of investors—this constraint matters less than it does for a technology startup hoping to attract institutional capital.
“Tier 2 carries heavier requirements, including audited financial statements and continuous SEC reporting, but remains far less costly than a traditional IPO.”
Market data: intent versus reality
The SEC's data on Regulation A+ offerings from June 2015 through December 2024 reveals a wide gap between ambition and execution. Over that period, more than 1,400 offerings sought to raise an aggregate of more than $28 billion. Actual capital raised was approximately $9.4 billion across more than 800 issuers—roughly one-third of what was sought.
This discrepancy reflects the nature of Regulation A+ offerings. Many are structured as best-efforts offerings, meaning the company keeps funds only as they arrive; the issuer does not guarantee that it will reach its target. Some companies undertake offerings without hiring underwriters, managing the sales themselves. Institutional investors participate less frequently than in traditional private offerings, limiting the scale of funding per investor.
Tier 2 offerings dominate the market, raising over 95 percent of reported proceeds despite higher compliance costs. The average Tier 2 offering that successfully raised capital brought in $12.5 million. Financial sector companies account for roughly 46 percent of the capital sought and 64 percent of actual proceeds raised. Business-service issuers and real estate companies, including REITs, also reported high amounts of capital sought and raised.
The issuer profile and who succeeds
Regulation A+ issuers are typically young, small companies without established profitability. Fewer than 20 percent had previously filed Securities Act registration statements with the SEC, indicating that most are raising publicly for the first time. The companies that successfully raise $1 million or more tend to be larger, with greater reliance on testing the waters and the use of intermediaries to reach investors.
The program expands the universe of founders who can access public markets without the institutional venture capital machine. A founder who has built a sustainable but slower-growth business, or who operates in a geographic area or industry underserved by venture firms, can still reach dispersed investors through Reg A+ without yielding control to a syndicate. The challenge remains that building investor awareness, managing the fundraising roadshow, and reaching sufficient demand to close the offering requires effort and capital that many small companies underestimate.
Related coverage: What Financing Options Exist for New York Startups Beyond Venture Capital; What Preferred Stockholders Actually Get When They Fund Your Startup; How to evaluate venture debt when interest rates stabilize.
