What Is Regulation A+? How the Mini-IPO Framework Works

Regulation A+ is an SEC exemption that lets companies raise up to $75 million from the general public — accredited and non-accredited investors alike — without going through a full IPO. Often called a "mini-IPO," Reg A+ requires SEC qualification (a review process similar to but lighter than full registration) and ongoing reporting, but skips many of the costs and complexities of a traditional public offering. If you've invested through platforms like Masterworks or StartEngine, you've likely participated in a Reg A+ offering.

How Reg A+ Works

Regulation A+ was modernized by the JOBS Act in 2015, expanding the original Regulation A (which capped raises at $5 million and was rarely used) into a practical fundraising tool. The "+" reflects these enhanced provisions.

The process works like this: a company files an offering circular (similar to a prospectus) with the SEC using Form 1-A. The SEC reviews the filing, asks questions, and eventually "qualifies" the offering — meaning the company can begin selling securities. This review process typically takes 3-6 months.

Once qualified, the company can sell shares to anyone, with no individual investment limits. There's no income or net worth test. A first-time investor with $500 has the same access as someone with $5 million. This universal accessibility is what makes Reg A+ distinct from Regulation D offerings that restrict participation to accredited investors.

Tier 1 vs. Tier 2 Offerings

Reg A+ has two tiers with different rules:

Tier 1

• Maximum raise: $20 million per year
• Investor limits: None
• State registration: Required in every state where securities are sold
• Ongoing reporting: None required after the offering closes
• Financial statements: Reviewed (not audited) financials required

Tier 1 is rarely used because state-by-state registration is expensive and time-consuming. Registering in all 50 states can cost $50,000-$100,000+ and add months to the timeline.

Tier 2

• Maximum raise: $75 million per year
• Investor limits: Non-accredited investors limited to 10% of income or net worth per offering (self-certified)
• State registration: Preempted — federal qualification covers all states
• Ongoing reporting: Annual, semi-annual, and current event reports required
• Financial statements: Audited financials required

Tier 2 dominates because state preemption makes it practical. The ongoing reporting requirements add cost but provide investors with regular financial updates — something most private offerings lack.

What Is Reg A+ Used For?

Real Estate

Real estate is the largest category of Reg A+ offerings. Companies like Masterworks use Reg A+ to sell fractional shares in fine art, but the framework is equally popular for real estate funds and individual property deals. The structure lets sponsors raise capital from a broad investor base without limiting participation to accredited investors.

Fundrise's early offerings used Reg A+ to raise hundreds of millions from tens of thousands of investors — something impossible under Regulation D's restrictions.

Consumer Brands Going Public

Some companies use Reg A+ as a stepping stone to a full public listing. They raise capital, build a shareholder base, and then list on a major exchange. This path appeals to brands with loyal customer bases who want their customers as shareholders.

Fintech and Technology Companies

StartEngine itself raised capital through Reg A+, and many technology companies have used the framework to raise $5-$50 million rounds from their user communities.

Crypto and Digital Assets

Token offerings have used Reg A+ to provide regulatory clarity. By going through SEC qualification, crypto projects signal legitimacy — though the SEC has become increasingly skeptical of token offerings in recent years.

The SEC Qualification Process

What is Reg A+ qualification actually like? It's substantially more rigorous than filing a Form D for a Regulation D offering, but less demanding than a full S-1 registration for an IPO.

Form 1-A filing includes: a detailed description of the business, risk factors, management backgrounds, financial statements (audited for Tier 2), the planned use of proceeds, and the terms of the securities being offered.

SEC review typically involves 1-3 rounds of comments from SEC staff. The company must respond to each comment, often revising the offering circular. This back-and-forth takes 3-6 months.

"Testing the waters" is a unique Reg A+ feature. Companies can gauge investor interest — collecting non-binding indications of interest — before spending the money to complete the SEC qualification process. This lets issuers validate demand before committing.

Post-qualification reporting for Tier 2 includes annual reports (Form 1-K), semi-annual reports (Form 1-SA), and current event reports (Form 1-U) for material changes. This ongoing transparency benefits investors but costs the company $50,000-$150,000 annually.

Reg A+ vs. Other Exemptions

Understanding what is Reg A+ requires seeing where it fits among alternatives.

Reg A+ vs. Reg CF: Reg CF caps raises at $5 million with individual investment limits. Reg A+ allows up to $75 million with no individual caps (for accredited investors; non-accredited limited to 10% of income/net worth under Tier 2). Reg A+ requires SEC qualification; Reg CF requires only a Form C filing. For a detailed comparison, see Reg CF vs Reg A+.

Reg A+ vs. Reg D (506c): Reg D has no SEC review process and no fundraising cap, but restricts participation to verified accredited investors. Reg A+ allows everyone to invest but requires SEC qualification and ongoing reporting.

Reg A+ vs. Full IPO: An IPO requires full SEC registration (Form S-1), investment bank underwriting, and compliance with stock exchange listing requirements. Costs run $2-10 million+. Reg A+ costs $200,000-$500,000 total and skips the underwriting requirement.

Investing in Reg A+ Offerings

From an investor's perspective, Reg A+ offerings work like this:

1. Find an offering through platforms like StartEngine, Masterworks, or directly from the issuing company.
2. Review the offering circular — this is your primary disclosure document and is available on the SEC's EDGAR database.
3. Invest by completing the platform's process. Most accept bank transfers or credit cards. Minimums vary from $100 to $5,000+.
4. Receive shares in the form of book-entry securities held by a transfer agent.
5. Monitor through the company's ongoing reports (Tier 2) or directly through the platform.

Unlike Reg CF, there's no mandatory holding period before resale (though finding a buyer may be difficult). Some Reg A+ companies trade on secondary markets or eventually list on major exchanges.

Risks of Reg A+ Investments

Most Reg A+ companies are early-stage. Despite the SEC review process, the qualification doesn't mean the SEC endorses the investment. Many Reg A+ companies are pre-profit, and some are pre-revenue.

Liquidity is limited. Even though Reg A+ securities are technically freely tradable, most don't have active secondary markets. Unless the company lists on a public exchange, selling your shares before an exit may be difficult.

Valuation opacity. Many Reg A+ companies set their own valuations with limited market validation. A company claiming a $50 million valuation in its offering circular may not have the revenue or assets to justify that number.

Dilution. Future fundraising rounds can dilute your ownership, especially for companies that need multiple rounds of capital to reach profitability.

For additional context on startup investing, read our guide on what is Reg CF.

Frequently Asked Questions

What is Regulation A+ in simple terms?

Regulation A+ is an SEC rule that lets companies raise up to $75 million from the general public — both accredited and non-accredited investors — through a process simpler and cheaper than a traditional IPO. The company files an offering circular, the SEC reviews it, and once qualified, anyone can invest. It's sometimes called a "mini-IPO."

Do I need to be accredited to invest in Reg A+?

No. Reg A+ is open to all investors regardless of income or net worth. Under Tier 2, non-accredited investors are limited to investing no more than 10% of their annual income or net worth per offering (self-certified). Accredited investors face no per-offering limits. This broad accessibility is Reg A+'s primary advantage over Regulation D.

How much can a company raise under Reg A+?

Tier 1 allows up to $20 million per year, and Tier 2 allows up to $75 million per year. Most companies use Tier 2 because it preempts state registration requirements. These limits reset annually, so companies can run multiple Reg A+ rounds over successive years if needed.

Is Reg A+ safer than Reg CF?

Reg A+ involves more SEC scrutiny — the SEC reviews the offering circular and can require changes. It also mandates audited financials (Tier 2) and ongoing reporting. These provide more transparency than Reg CF's lighter requirements. However, SEC qualification doesn't guarantee the investment is sound. Both carry significant risk.

How long does a Reg A+ offering take to launch?

From initial filing to SEC qualification typically takes 3-6 months, depending on the complexity of the offering and the number of SEC comment rounds. Companies can "test the waters" to gauge investor interest during this period. The actual fundraising campaign can run for up to a year after qualification.

Can I sell my Reg A+ shares?

Reg A+ Tier 2 securities are freely tradable with no mandatory holding period — unlike Reg CF's one-year restriction. However, most Reg A+ companies don't trade on public exchanges, so finding a buyer can be challenging. Some platforms like StartEngine operate secondary markets, and some companies eventually list on the NYSE or Nasdaq.

ModernAlts is an independent research platform. Nothing in this article constitutes investment, legal, or tax advice. Alternative investments involve risk including possible loss of principal.