Regulation A: What Is It and What Does It Mean for Kurve?

Regulation A+, or Reg A equity crowdfunding is the 21st century way to raise capital. You no longer need to be an accredited investor with a seven-figure net worth to reap the rewards of investing. 

Under the Title IV provision of the 2012 Jumpstart Our Business Startups (JOBS) Act, which passed in 2015, both startups and later-stage companies can use Regulation A crowdfunding to raise up to $75 million per fiscal year from accredited and non-accredited investors.

In 2020 alone, companies who utilized Regulation A offerings raised a total of $1.48 billion. Between 2015 and 2019, 183 Regulation A issuers raised a total of $2.44 billion.

Here’s a breakdown of Regulation A and how Kurve Therapeutics will be using this accessible and inclusive offering.

What Is a Reg A Offering?

The original employees of Google, Microsoft, Apple, and the like are considered some of the luckiest individuals in the startup world. Imagine being among the first to receive shares of a company like Microsoft before it went public. 

Enter Regulation A. This alternative to traditional institutional and venture capital investing allows anyone to become an investor, regardless of their income bracket or connections. Private companies no longer have to rely on a mere 2% of wealth-holders to raise capital.

Reg A functions like a mini IPO, but it is exempt from the Securities Act of 1933, which requires companies to fully register with the SEC. Companies utilizing Reg A are required to file an offering statement with the SEC, however, and provide potential investors with their approved offering circular. 

In order for a company to take part in a Regulation A offering, they must be a US-registered company, though the issuing company’s operations do not have to be US-based.

There are two tiers that divide Regulation A: Tier 1 and Tier 2.

Tier 1: $20M

• • A company can only raise up to $20 million within one fiscal year (12 months).

• • The issuer must file offering statements with the SEC.

• • The issuing company must satisfy Blue Sky laws in every state its investors reside.

• • Tier 1 allows anyone to invest worldwide.

• • Non-accredited investors have no cap on their investment amount.

• • The issuing company is allowed to publicly advertise.

• • No ongoing reporting is required, but a report on the final status of the offering is required.

• • The issuing company is required to provide financials.

• • Audits are not required prior to filing nor after the raise has been completed.

• • This tier is typically used by banks.

Tier 2: $0–$75M

• • A company can raise up to $75 million within one fiscal year (12 months).

• • The issuing company must produce audited financial statements via an annual US-GAAP audit. An upfront US-GAAP audit is also required prior to Reg A approval; the audit will dive into the last two years of the issuing company’s finances for existing companies; startups will be audited for the entire lifespan of the company. 

• • Ongoing reporting is required, including a final status report. Every six months, the issuing company must provide financial statements.

• • The issuing company does not have to register/qualify their offerings with state securities regulators.

• • The issuer must file offering statements with the SEC.

• • The issuing company is allowed to publicly advertise.

• • Tier 2 allows anyone to invest worldwide.

• • Non-accredited/retail investors have a limit to their investment amount: 10% of their annual income/net worth per year. 

• • Non-accredited investors are limited to 10% of income/net worth per year.

Who Can Invest in a Reg A Offering?

To put it simply, anyone and everyone — anywhere.

Regulation A is the democratization of investing. It opens the door for every person to invest in a company, whether they are a seasoned accredited investor or the 99%.

Through this equity crowdfunding investment opportunity, companies invite all net worths and financial brackets to share in their growth and success. Unlike traditional investing, Regulation A+ does not require verification of investor status, income, or net worth. Most Reg A+ investments can even be made with a credit card.

Benefits of a Regulation A Offering

Despite the substantial documentation requirements, Regulation A offerings come with an abundance of benefits for companies and investors alike.

Benefits for Issuing Companies

• • Acquire a diverse investor base
    
    • • Through Reg A, companies have access to more than just accredited investors. Retail investors provide different motivations, help build a company’s community and network, and positively influence brand image. The world outside accredited investors is a massive, relatively untapped pool of investors who are ready and excited to be a part of a company’s success story.
    • • Tapping into a diverse investment group allows a company to maintain greater control of their organization and strategy.
    • • Retail investors allow a company to turn customers into investors and investors into customers.
    • • Reg A allows for strong community-building and access to investors who are guided by their values. These new investors are motivated to support businesses that align with their personal values and passions; they are more likely to passionately invest in medtech built to help Alzheimer’s disease patients if they have loved ones who have suffered from the disease. That builds brand loyalty and turns investors into “brand evangelists.”

• • A faster road to IPO
    
    • • It is much easier to take a company public and listed on the NYSE or NASDAQ after conducting a Regulation A raise.
    • • Going public after Reg A is more cost-effective than the traditional S-1 IPO route — and a lot faster. A traditional S-1 IPO will take 30–90 days to get qualified by the SEC, while a Reg A IPO has seen turnaround times of just nine days.
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• • Liquidity
    
    • • Through Reg A, all stock classes and shares are considered liquid and can be resold without any restrictions.

• • Raise substantial capital
    • • Regulation A enables startups, smaller companies, and later-stage companies to raise large amounts of funds.
    • • An issuing company can raise up to $75 million per year under Tier 2 and up to $20 million per year under Tier 1. 
    • • Companies can offer and sell unrestricted shares of their company to any level of investor. This allows for a greater investor pool and an expanded reach.

• • Maintain control
    • • Reg A allows CEOs to maintain control over their company. 
    • • Unlike traditional private equity/venture capital raises, Reg A does not require a company to cede board seats. Because Reg A allows a company to raise capital from a wide pool of investors, the CEO/founder of the issuing company can spread out ownership of the company.

Benefits for Investors

• • Opportunity
    • • Regulation A allows investors to participate in the types of opportunities that the original employees of Google, Microsoft, Apple, and the like were offered. 
    • • Being among the first to receive shares of a startup like Microsoft before it went public was once considered the rarest and luckiest opportunity. Reg A makes that possible at scale, for anyone.

• • Democratization of Investing
    • • Reg A opens the door for every person to invest in a company — whether they’re a seasoned accredited investor or not.
    • • All net worths and financial brackets are allowed to share in the growth and success of a company.
    • • Unlike traditional investing, Reg A does not require verification of investor status, income, or net worth.

• • Invest Passionately
    • • When you open the door to non-accredited investors, you allow passion to flood the gates.
    • • Reg A allows people who are passionate about a company’s product, service, or mission to invest with fervor and loyalty.
    • • If you lost a loved one to a neurodegenerative disease or cared for them through their diagnosis, Reg A gives you the opportunity to invest in reshaping the landscape of medicine. 
    • • If you’re a healthcare professional who is looking for a way to do more for patients, Reg A allows you to make impactful change through your investment.
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Kurve’s Regulation A Offering

1 in 6. Over one billion people suffer from neurological disorders. 

 

Through our patented next-generation medtech and specialty drug formulations, we aim to reshape the treatment landscape for debilitating diseases such as Alzheimer’s, Parkinson’s, and MS.

 

The market size for disease-modifying treatments for central nervous system disorders is expansive — both monetarily and in population. Over 55 million people suffer from Alzheimer’s disease, yet there are no efficient treatments available. Alzheimer’s alone has a global economic cost of more than $1.3 trillion annually. 

 

Unlike most medtech and specialty drug companies, Kurve Therapeutics is ready for Phase III clinical trials for three separate disease states — placing us one clinical trial away from FDA approval and market launch.

 

We have launched a Tier 2 Regulation A offering with the SEC, aiming to raise $50 million in our efforts to positively impact the lives of millions of people. This equity crowdfunding raise will aid us through our final Phase III clinical trial, development, and market launch.

Our mission is simple: we do this because we can and because we have to. We encourage everyone to embody that mission by our side. If you or a loved one has been affected by a neurodegenerative disease such as Alzheimer’s or Parkinson’s, you will now have the power to help create breakthrough change for the millions of people who suffer. 

 

Kurve Therapeutics is now accepting investments from the general public through our Regulation A offering. 

Visit kurvetx.com to learn more.