Since its inception, the majority of deal flow reviewed on the KingsCrowd platform relates to companies raising capital under Regulation Crowdfunding. However, there are other offering exemption types (such as Regulation A and 506(c) under Regulation D) that also involve raising capital from the crowd. Under Regulation A, founders can seek funding from both accredited and non-accredited investors. Recently, the Securities and Exchange Commission (SEC) enhanced some of the features of Regulation A in a way that was attractive to issuers and investors, so now it is sometimes referred to as Regulation A+ — the “+” reflecting these recent enhancements. According to StartEngine, “Regulation A+ has a reputation for being the ‘Mini IPO’. There are key differences from a true ‘Initial Public Offering’, but by using Regulation A+, companies can raise up to $75M in a given year from the public.” To date, KingsCrowd’s Merlin algorithm has only provided numerical ratings for Regulation Crowdfunding raises — though Analyst Reports have been available across offering exemption types.
We are thrilled to announce that we are now expanding our Merlin ratings to include Regulation A raises!
The nature and amount of information that companies must furnish for a Regulation A offering is considerably more robust and detailed than a Regulation Crowdfunding offering. Because companies can raise larger amounts of capital under Regulation A, these deals tend to be classified as growth stage companies. After much consideration, however, we came to the conclusion that a growth stage designation should not be solely dependent on offering exemption type.
For Merlin ratings v3.0, we have decided to split companies into either early stage or growth stage and compare metrics accordingly. This split will factor in development stage, revenue, and other key performance metrics. The methodology and statistical modeling behind the algorithms, however, will remain the same.
We are excited to be expanding our coverage as leaders in the space. Additionally, we are aware that many Regulation A deals are raised independent of platforms like Republic and Wefunder. Our team is actively working to include these raises and ensure they receive both ratings and coverage.
We are thrilled to be consistently evolving our rating system, and we hope that this additional coverage will continue to enable you to make informed, data-driven investment decisions.
