How Much Does a Regulation A+ Mini IPO Cost?

July 7, 2016

As equity crowdfunding gains traction in the U.S., startups and fast growing companies that seek to raise money via a ‘mini IPO” need to know the answer to a simple question: “What does it really cost to pursue a Regulation A+ Offering?”

According to San Diego, CA-based Manhattan Street Capital, “Depending on the cost of your financial audits, and your lawyers, a reasonable estimate is $40k to $50k plus audit cost to complete your company qualification with the SEC (before marketing costs). Specialized firms engaged for the legal aspect of the SEC work charge a fee of $42k to $52k (or more, depending on your choice of law firm) including due diligence.  We expect specialized auditors to emerge, focused on Reg A+, and as a result the costs will reduce with time.  If you select to use Tier 1, no audit is required. So your costs will be reduced to the attorney fees to get registered with the SEC. Tier 1 legal fees will be higher or possibly much higher, depending on which states you raise capital in.”

If your company is a startup, then the audit fees will be lower, of course – perhaps as low as $2k. Far more for a complex, established business.

Marketing Costs. You will need to spend at least $50k and up to $250k (or more) on marketing using a carefully selected marketing agency to promote your offering widely in order to bring in enough investors to fund your offering. We will introduce you to a specialized, marketing agency (that covers all the aspects that are required) as a part of both verifying that they are confident they can bring in sufficient investors to raise capital for your particular offering and also to get a specific cost estimate.  You can use any agency you choose, as long as they are capable.  We have selected specialized agencies that are very good at these types of transactions.

In summary, the cost range for cash expenditures required before the offering brings in funding is from $100k and up.

The other costs involved are:

1) Investment Bank/Broker-Dealer Fees. Manhattan Street Capital Fee is $100 per investor plus equivalent warrants.

2) The broker dealer, transfer agent and Escrow fees which will be charged by the broker dealer out of the capital when raised, and will amount to up to 1.5% of capital raised.

3) Due diligence fees may run up to $4k per company.

The above are estimates intended to help companies scope out the costs of dounducting a Regulation A+ offering. The actual numbers may vary.

Manhattan Street Capital is a growth capital marketplace for mid sized companies and mature startups and helps companies raise capital by providing all the services and information that are needed for companies to make successfull Regulation A+ offerings. Additional information at their website