The mid-July filing for an initial public offering by Chicken Soup For The Soul Entertainment comes on the heels of three so-called Reg A+ offerings in June. The first such offerings happened a month earlier when ADOMANI and Myomo completed offerings on June 9. ShiftPixy went public shortly thereafter on June 29.
With “Chicken Soup” now in the pipeline on the heels of these offerings, there’s ample evidence of pent-up demand for solutions that enable smaller companies to access capital in efficient and less expensive ways. Further there’s now some evidence that the JOBS Act with its Reg A + filing option (and crowdfunding initiative) has stepped into this void with some measure of success.
Unlike a traditional S-1 filing, which can cost $2.5 million — or more — to bring to fruition, a Reg A + filing can be completed for less than half of that amount. For small companies, founders who often saw the cost of a full blown filing as a bet the farm proposition, the lower cost of a Reg A+ filing is a compelling scenario.
So-called Regulation A filings are not new. The SEC long envisioned a less difficult path for smaller issuers to raise capital without the full burden that is imposed on the country’s largest issuers. But its history has been complex its use scant, and ultimately Regulation A was rolled into the omnibus legislation known as JOBS Act that contained six other bills.
The JOBS Act was signed into law by Barack Obama in 2012 but specific provisions on Reg A+ were not approved by the SEC until May of 2016. Following a year of germination while securities professionals worked to understand how the Reg A+ regulations work, the first offerings are now being completed.
Adomani and Myomo, which were the first ever Reg A+ deals to trade on a major marketplace — Adomani trades on the Nasdaq Capital Market — manufacture hybrid drive trains and medical robots, respectively. Shiftpixy offers employment compliance solutions. Chicken Soup produces television and video programing.
All of these companies are growing, some quite rapidly, and creating clean, high paying jobs in technology. With more Reg A+ deals in the pipeline, the JOBS Act is starting to deliver on its name.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
David Evanson
David R. Evanson has more than 30 years working in the media, on Wall Street and in media relations. He has worked with investment banks, asset managers, private equity investors and institutional brokers on a variety of marketing and communications challenges. David is also a recognized financial writer, having authored five books on finance and economics, and articles in Barron’s, Forbes, Investment Dealers’ Digest, On Wall Street, Financial Planning and Entrepreneur, among others. David brings to the table a well-developed understanding of the capital markets, investments and corporate finance, and a talent for creating targeted media communications programs for financial services providers.
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