The Securities and Exchange Commission (SEC), Division of Economic and Risk Analysis (DERA), has recently published a comprehensive analysis report concerning Regulation A (Reg A). This document highlights the significant impact of this regulation on the fintech sector since it was updated under the JOBS Act of 2012.
The report puts forth compelling statistics, stating that Reg A has managed to raise approximately $9.4 billion for over 800 issuers. It indicates that Reg A serves as an essential vehicle for capital formation.
Reg A was intended to assist smaller companies in effectively gaining access to growth capital, which is often challenging due to the considerable costs and complexities of traditional public offerings. By offering a more cost-effective and simple route to raise capital, Reg A is playing an instrumental role in supporting the growth strategies of these smaller companies across various industries.
Further carving out its success, the SEC report also emphasized that not only does the majority of Reg A issuers make use of intermediaries, but also, a significant portion opt to list their securities on an exchange. This proves valuable for the fintech companies, as it supports a sound exit strategy for investors.
It’s fascinating to note that the report also considered Regulation Crowdfunding (Reg CF). It states that since its inception in May 2016, this regulation has seen around 6800 offerings and has raised approximately $400 Million.
In conclusion, the recent SEC report paints an optimistic picture of alternative forms of capital formation. Regulations like Reg A and Reg CF prove to be effective platforms that enable companies, particularly smaller firms, to achieve their growth and fundraising objectives. This analysis furthers our understanding of the evolving fintech landscape and the role of regulatory standards in promoting economic growth.
