Bill Overview
Title: Regulation A+ Improvement Act of 2022
Description: This bill increases the dollar limit of certain securities offerings exempt from registration requirements from $50 million annually to $75 million annually, adjusted in future years for inflation.
Sponsors: Rep. Budd, Ted [R-NC-13]
Target Audience
Population: Individuals involved with small to medium enterprises (SMEs) and their investors
Estimated Size: 30000000
- The securities offering exemption limit adjustment affects companies that are raising capital through Regulation A+ offerings.
- The primary beneficiaries are likely smaller companies or startups that use Regulation A+ to avoid the high costs and regulatory burdens of traditional IPOs.
- Investors, including both institutional and retail investors, who purchase shares in these exempt offerings will be impacted.
- As of 2020, the U.S. had about 30.2 million small businesses, some of which might use Regulation A+ to raise capital.
- Globally, there are similar numbers of small- to medium-sized enterprises (SMEs) that could leverage similar exemptions in their own markets if they exist.
- Given the localized nature of Regulation A+, the direct global target would be less pronounced than in the U.S.
Reasoning
- The policy primarily impacts smaller companies or startups seeking to raise capital, so I included entrepreneurs and executives from those companies.
- Given that investors will also be affected, I included individuals who are likely to invest in Regulation A+ offerings, such as retail and institutional investors.
- Some individuals are not directly affected by the policy because they do not engage with such investment mechanisms, so they serve as control interviews without significant changes in wellbeing.
- The population distribution considers diversity in business involvement across industries and states, reflecting different levels of engagement with Regulation A+ investments.
Simulated Interviews
Startup Founder (San Francisco, CA)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The policy could significantly ease the process of raising funds for my company.
- Avoiding traditional IPO costs is a major advantage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 9 | 5 |
| Year 20 | 7 | 5 |
Venture Capitalist (Austin, TX)
Age: 42 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 3/20
Statement of Opinion:
- This act increases opportunities to back innovative companies earlier.
- Easier for smaller companies to scale up before an IPO can prove beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Retail Investor (Miami, FL)
Age: 29 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 4/20
Statement of Opinion:
- The ability to invest in startups via Regulation A+ is intriguing.
- However, there's always risk with smaller, non-traditional investment paths.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 6 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 4 |
Small Business Owner (Detroit, MI)
Age: 54 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- This policy might provide a new way to get the needed funds.
- Unsure how much paperwork would actually decrease.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 4 |
Tech Employee (Seattle, WA)
Age: 31 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- The company's growth avenues might improve under this policy.
- More capital allows us to invest in new projects and tech faster.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Institutional Investor (New York, NY)
Age: 48 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 7.0 years
Commonness: 3/20
Statement of Opinion:
- The ability to support diverse emerging companies aligns with my strategy.
- Positive for diversifying risk through smaller companies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 6 | 5 |
Recent College Graduate (Chicago, IL)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- Learning about opportunities like these is exciting early in my career.
- May lead to more jobs in the startup ecosystem.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 5 | 5 |
Accountant for SMEs (Denver, CO)
Age: 36 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 4.0 years
Commonness: 10/20
Statement of Opinion:
- More SMEs might seek financial advice under this expanded rule.
- Simplifying finances for capital influx is critical.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 5 |
Freelancer (Portland, OR)
Age: 27 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- Not directly impacting me unless I grow significantly.
- It's great for fast-growing startups needing funds quickly.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 4 |
Regulatory Consultant (Atlanta, GA)
Age: 40 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- This might streamline some compliance work making it easier for clients.
- Questions about adequate investor protection remain.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $15000000 (Low: $10000000, High: $20000000)
Year 2: $15000000 (Low: $10000000, High: $20000000)
Year 3: $16000000 (Low: $11000000, High: $21000000)
Year 5: $17000000 (Low: $12000000, High: $22000000)
Year 10: $20000000 (Low: $15000000, High: $25000000)
Year 100: $50000000 (Low: $30000000, High: $70000000)
Key Considerations
- The likelihood of increased usage of Regulation A+ offerings due to the raised threshold.
- The impact on the traditional IPO market, which could see a decline in smaller IPOs as they opt for Regulation A+ instead.
- Tracking of new compliance costs related to an uptick in Regulation A+ usage.
- The potential for increased investor risk if offerings are not adequately monitored by the SEC.