TheCorporateCounsel.net

Earlier this month, I reported on a data dump from the SEC’s Division of Economic and Risk Analysis (DERA) providing new data and analysis on the key market areas of public issuers, exempt offerings, commercial mortgage-backed securities, asset-backed securities, money market funds, and security-based swap dealers. Yesterday, the SEC announced that DERA has published three new reports that provide information on utilization of Regulation A and Regulation Crowdfunding and beneficial ownership of qualifying private funds. The SEC announcement notes that following about the Regulation A and Regulation Crowdfunding papers:

– Analysis of the Regulation A Market: A Decade of Regulation A provides statistics on the state of the Regulation A offering exemption over the past decade. It documents the level of offering activity and reported proceeds as well as the characteristics of issuers and offerings relying on this exemption. There were more than 1,400 offerings during this period seeking an aggregate of more than $28 billion in capital. Approximately $9.4 billion in proceeds was reported by more than 800 issuers. A typical Regulation A issuer was relatively small and young, and most issuers had not yet established a record of profitability.

– Analysis of Crowdfunding Under the JOBS Act provides an analysis of offering activity in the Title III securities-based crowdfunding market between May 16, 2016, (effective date of Regulation Crowdfunding) and December 31, 2024. During this period, there were more than 8,400 offerings initiated by more than 7,100 issuers, excluding withdrawn offerings. The offerings sought a total of approximately $560 million based on the target (minimum) amount. However, almost all offerings had a minimum-maximum format and accepted oversubscriptions up to a higher maximum. In the aggregate, the maximum amount sought in these offerings was approximately $8.4 billion. Based on the analysis of Electronic Data Gathering, Analysis, and Retrieval (EDGAR) filings during this period, there were more than 3,800 offerings where issuers reported proceeds; in total, they reported approximately $1.3 billion in proceeds. The crowdfunding exemption has continued to gain momentum over time and serves small and early-stage companies seeking access to capital, often for the first time. The median issuer had approximately $80,000 in total assets, including $13,000 in cash, $60,000 in debt, and $10,000 in revenue, and three employees.

DERA’s papers on Regulation A and Regulation Crowdfunding are timely as the SEC considers ways to promote capital formation, particularly for smaller companies.

– Dave Lynn