On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law by President Barack Obama. The Act required the SEC to write rules and issue studies on capital formation, disclosure, and registration requirements. Both Title III (Crowdfunding) and Title IV (Regulation A) help businessman raise capital from accredited and non-accredited investors.The difference between these regulations are connected with amounts of money that they are trying to raise, investor and offering details, filings and disclosures.
Regulation Crowdfunding, also known a Title III of JOBS Act was adopted in May of 2016 as a way to reduce regulatory restriction so making it possible for companies to raise capital from both accredited and non-accredited investors. Companies that want to raise $1,070,000 or less can now raise it trough crowdfunding portals. If this is the case with your company there are some requirements that you need to meet. Company must be U.S. based and not registered with SEC. Marketing is allowed but primary solicitation and disclosure happens on a funding portal. Disclosure is mandated by statute and regulation and it does not require review by SEC. Financial statements have different requirements depending on the amount of the offer.
Regulation A, also known as Title IV of the JOBS Act or the Reg A+ allows companies to raise up to $50 million from both accredited and retail investors. Regulation is similar to traditional initial public offering but in this case the company can will remain private. The main reason why company will use Reg A is because it is faster and less expensive than traditional IPO. Just like with Ref CF there are some criteria. Companies must be U.S or Canada based and not registered with SEC. There are no restrictions on marketing, it can be marketed anywhere. Reg A+ still requires more accounting and legal costs, qualification with SEC and ongoing disclosure requirements.
