Who Dares to be the next Ben and

Jerrys or Fundrise to Raise up to $50

Million through Regulation A+?
By David Drake
All startups need capital to innovate, launch, scale and grow. For companies seeking additional
financing for their working capital or to expand its operations but do not yet want to risk an IPO,
using the newly approved Regulation A+ is a possible alternative.

Ben & Jerrys Homemade Inc.

(BJICA) is one firm that was able to successfully raise $750,000 from 1800 ice cream lovers within
60 days by employing the mandates of the former Regulation A offering with all its cumbersome
procedures.

New York Super Fudge Chunk from Ben & Jerrys (Photo credit: www.benandjerrys.com.mx)
One of the leading real estate #crowdfunding platforms, Fundrise, also used Regulation A to raise
funds for its first project in Washington DC called Maketto, an old building renovated and converted
into a communal market where people converge and socialize as well. They purchased the building
using their own money and raised $350,000 from 175 investors at $100 per share for the

renovation. Its second Regulation A offering was for 906 H Street NE LLC in Washington DC.
Fundrise raised $350,000 from the crowd, with $182,400 raised 2 days after offering went live. For
its 3rd Regulation A offering in 2014, Fundrise chose the property at 1539 7th Street NW,
Washington DC. Estimated project cost was $2 million, with $350,000 made available for general
public investing for as little as $100 per share.

Ben Miller, co-founder and CEO of Fundrise, at Maketto, their first project funded through the old
Regulation A (Photo credit: cnbc.com)
Regulation A+ is an upgrade/improvement on Regulation A. With Reg A, $5 million can be raised in
an offering from unaccredited investors, subject to state blue sky laws. On the other hand, using
Tier 2 (exempted from state blue sky law) of Reg A+ companies can raise up to $50 million online
as capital; and only $20 million under Tier 1, subject to blue sky law (reviews and fees) but will
not file audited accounts with SEC. Firms undergo a cumbersome, tiring and expensive process
using Reg A rules. With the newly enacted Reg A+, the firms have two options to choose from
the amount to be raised and how to go about it.
Last 21 May 2015, experts and thought leaders on Regulation A+, Crowdfunding and the
Jumpstart Our Business Startups (JOBS) Act, as well as entrepreneurs, investors, angels, heads of
venture capital firms, and industry professionals converged in New York City in a Master Class to
discuss the nuances and opportunities brought about by the newly approved Regulation A+. This
event brought

together crowdfunding stakeholders who deliberated

the viability of the new

regulation and how it can successfully be applied in raising up to $50 million in capital.

Panel 1: Allen Shayanfekr, Scott Andersen, and Alysse Romero are panel speakers
I moderated the first panel wherein we discussed Why startups should not ignore Regulation A+.
Alysse Romero,

Investor Representative for American Homeowner Preservation LLC, Allen

Shayanfekr, Co-Founder of Sharestates and Scott Andersen, FinLawyer and ConsultDA partner,
were panelists. Scott Andersen said, It is still expensive to invest using Regulation A+ in
comparison to a Reg D offering. Keep in mind only a handful of lawyers in North America during
the last five years have actually prepared an offering using Reg A, and now with its broader scope
and possibilities as Reg A+, attorneys are estimating total costs for conducting an offering,
including obtaining an audit and making periodic disclosures, will be in the $75,000 range. Allen
Shayanfekr stated that the event was a blast and very educational for people who werent familiar
with Regulation A+. He said the two most important takeaways for him were: First, if you can do
a private offering rather than a public one, you should stick to the private. Its cheaper, faster, and
with fewer reporting requirements. Second, if you decide to do a public offering be prepared for
a long process and also make sure you have an anchor investor to legitimize your raise. Alysee
Romero added that the most transparent way to raise capital is to have a following, people who
connect with you, your business, and your service or product etc. To get someone to emotionally
connect is the most simplistic way to sell. It is also imperative to make sure your employees and
partners are also passionate about what service/product you are offering.

Joe Rubin, moderator for Panel 2, with 3 of the 4 speakers (from left to right) Brad Kayton,
Katherine ONeill, and Alan McGlade. Not in photo: Nick Jekogian.

Panel 2: Nick Jekogian, Brad Kayton, Katherine ONeill, and Alan McGlade
Panel 2 discussed How crowdfunding fits within the current Angel Investors and Venture Capital
landscape.

Joe Rubin, Director and Co-Founder of FundingPost, was the moderator, with

panelists: Alan McGlade, Managing Director of Digital Entertainment Ventures; Brad Kayton, Angel
Investor of Launchpad; Katherine ONeill, Executive Director of JumpStart New Jersey Angel
Network and Nick Jekogian, Founder & CEO of Signature Group Investments.

Scott Purcell of Fund America (standing) moderated Panel 3 with me and Bruce Lipnick of Asset
Alliance/Crowd Alliance (middle) as panel speakers. Not in photo: Brian Newman of Prodigy
Network.
The 3rd Panel discussed the impact of Regulation A+ on real estate crowdfunding. Scott Purcell,
CEO of FundAmerica, served as moderator. Brian Newman, Director of Business Development in
Prodigy Network, and Bruce Lipnick, Chairman and CEO of Crowd Alliance and Asset Alliance, and
I served as panelists.

Regulation A+, according to Scott Purcell, has the potential to become a

game-changer for medium sized businesses that need strategic capital to grow. Purcell mentioned
ways on how firms in the ecosystem like FundAmerica are helping to reduce these costs. Because
of the technology involved in offering securities online, it is great to know that firms like
FundAmerica are providing tools and services to make it as easy as possible for online platforms to
serve their customers and be compliant to regulations.

Nedo Belluccis triplex penthouse at 57th Street was filled with conference participants
The entrepreneurs and investors found the insights from the panel discussions to be an eyeopener. The straightforward steps and formula for online syndication and financing provided by the
securities and regulatory experts on the newly revised Regulation A+ were educational and
informative.

Now everyone is in a wait-and-see mode on how the use and execution of the

Regulation A+ will unfold in the next 6 months. It is interesting to note who will follow the
footsteps of firms like Ben & Jerrys and Fundrise who were able to use the old version of this
regulation successfully. By then, we will be able to see which firms out there are willing to take
this route and who will be the lawyers they will partner with to efficiently raise capital.

Networking session at the Penthouse

The event sponsors included Belluci Napoli, Madame Paulette, FinLawyer and ConsultDA. Join us
this

June

25,

2015,

for

more

discussions

on

Regulation

A+

in

the

real

estate

crowdfunding conference we are holding in New York City. It is a Master Class and limited to 30
people only. With all the rules in place, who do you think would benefit greatly in taking this new
method of capital acquisition?

David

Drake

is

the

Chairman

of LDJ

Capital,

private

equity

advisory; Victoria Partners, a 110 family office network; Drake Hospitality

Group; and The Soho Loft Media Group with divisionsVictoria Global
Communications, Times

Impact

Publications,

and The

Conferences. Reach him directly at David@LDJCapital.com.

Soho

Loft