Imagine you could run a public offering for your company — advertising it openly, taking investments from customers and fans as well as wealthy backers — without the seven-figure cost and year-long ordeal of a traditional IPO. That is exactly the lane Regulation A+ was built for. It lets smaller companies sell securities to the general public, including non-accredited investors, with a lighter disclosure regime than a full registration.
Most founders know two fundraising paths: private placements that shut out ordinary investors, and crowdfunding capped at $5 million. Regulation A+ Tier 2 sits above both, with raises of up to $75 million in any 12-month period. This guide explains how the two tiers work, what Tier 2 demands from your company, who is allowed to use it, and how to tell whether it fits your raise.
What Regulation A+ Actually Is
Under the Securities Act of 1933, any offer to sell securities must either be registered with the SEC or fit inside an exemption from registration. Regulation A is one of those exemptions: it allows qualifying companies to offer and sell securities to the public without a full registration statement.
The modern version comes from the JOBS Act of 2012. Before that law, Regulation A capped raises at $5 million a year — too little to justify the paperwork — and forced issuers to register in every state where they sold securities, so almost nobody used it. The SEC's 2015 rules, nicknamed Regulation A+, created two tiers with higher caps and freed Tier 2 offerings from state-by-state review. A later update effective March 15, 2021 raised the Tier 2 ceiling from $50 million to $75 million.
The key idea to carry through this guide: Regulation A+ is a public offering with training wheels. You can market it broadly and accept money from anyone, but you still file an offering statement, survive SEC staff review, and — under Tier 2 — keep reporting afterward.
Tier 1 vs. Tier 2: The Only Comparison That Matters
Every Regulation A+ offering runs under one of two tiers, and the company must print which tier it chose on the cover of its offering circular. If you raise $20 million or less, you may elect either tier. Here is how they differ:
| Feature | Tier 1 | Tier 2 |
|---|---|---|
| Maximum raise per 12 months | $20 million | $75 million |
| SEC review and qualification | Required | Required |
| State securities review | Required in each state | Not required (preempted) |
| Financial statements | Need not be audited | Must be audited by an independent accountant |
| Ongoing reporting | Exit report only | Annual, semiannual, and current reports |
| Limits on non-accredited investors | None | 10% of the greater of annual income or net worth |
Three of those rows deserve a closer look.
State review makes Tier 1 rare in practice
Tier 1 offerings must be reviewed and qualified by securities regulators in every state where securities are sold, on top of SEC review. That state-by-state process adds filing fees, legal bills, and months of delay — the same burden that made pre-JOBS Act Regulation A a ghost town. Tier 2, by contrast, treats buyers as qualified purchasers under federal law, which preempts state registration and qualification requirements. One regulator instead of up to fifty is the single biggest reason serious issuers choose Tier 2 even for raises under $20 million.
Only Tier 2 demands audited financials and ongoing reporting
Tier 1 financial statements do not have to be audited, and Tier 1 issuers owe investors nothing after the offering except a final exit report. Tier 2 requires audited financial statements in the offering circular — generally two years of US GAAP statements, or since inception for young startups — plus a permanent reporting rhythm: an annual report on Form 1-K within 120 days after fiscal year-end, a semiannual report on Form 1-SA within 90 days after the half-year, and current-event reports on Form 1-U. The annual report includes audited financials, a discussion of results, and disclosure of the business, management, related-party transactions, and share ownership.
Investment limits run in opposite directions
Tier 1 has no caps on who may invest or how much. Tier 2 caps each non-accredited investor at 10% of the greater of their annual income or net worth, measured alone or together with a spouse and excluding the primary residence. Accredited investors face no limit under either tier. In practice the Tier 2 limit rarely blocks a deal — it simply shapes minimums and marketing, since most community raises target checks far below any investor's 10% line.
What Tier 2 Demands From Your Company
Choosing Tier 2 means committing to a process with four major workstreams. None is as heavy as an IPO, but none is trivial either.
1. The Form 1-A offering statement
Everything starts with an offering statement on Form 1-A, filed electronically on EDGAR. The package includes the offering circular (the disclosure document investors read), two years of audited financial statements, and exhibits. SEC staff review the filing and typically respond with comment letters asking for more disclosure or clearer language. According to an SEC staff research report, the median time from first public filing to qualification was 78 days, with Tier 2 taking longer than Tier 1 because of the heavier disclosure. You may not accept a dollar of investor money until the staff declares the offering qualified.
There is no SEC filing fee for the Form 1-A process itself. If a broker-dealer participates in the offering, the materials must also be filed with and cleared through FINRA.
2. Audited books, ready before you file
The two-year audit is usually the critical path. Auditors need complete, reconcilable records — bank and card accounts tied out, revenue recognized properly, equity and option grants documented, related-party transactions identified. Companies that kept casual books face an expensive cleanup before the audit can even start, which is why experienced securities lawyers tell founders to get audit-ready a year before filing. Ongoing reporting then keeps the pressure on: the 1-K and 1-SA deadlines arrive whether or not your close process is disciplined.
3. Real money: roughly 10% of the raise
Industry estimates put the all-in cost of a Regulation A+ offering at about 10% of the capital raised, covering securities counsel, the audit, marketing, and platform or broker-dealer fees. An SEC staff study found median legal costs around $40,000 to $50,000 even in the exemption's early years, and total legal-plus-audit bills of $100,000 or more are common today. Broker-dealers that join the raise typically charge negotiated success fees of 5% to 10% of the capital they place. Because so much cost is fixed, Tier 2 is generally considered cost-effective only for raises above roughly $4 million — below that, the percentage drag becomes punishing.
4. A marketing engine, not just a filing
Unlike a quiet private placement, a Regulation A+ raise lives or dies on public marketing. Most offerings stay open for months — continuous offerings can run for up to two years from initial qualification — and issuers typically spend heavily on advertising, video, PR, and investor-relations support throughout. Budgeting for the raise without budgeting for the campaign is one of the most common ways founders stall out mid-offering.
The Perks That Make the Effort Worthwhile
If the demands sound steep, the privileges explain why hundreds of companies accept them.
Test the waters before you spend. Regulation A lets you solicit non-binding indications of interest from potential investors before or after filing the Form 1-A. These "testing the waters" communications are not offers to sell and create no commitments, so you can gauge demand — and refine your story — before paying for the full offering statement.
Advertise to everyone. Once qualified, you may market the offering publicly to accredited and non-accredited investors alike, with minimums often as low as a few hundred dollars. That makes Regulation A+ the natural vehicle for community rounds where customers become shareholders.
Skip state registration. As noted above, Tier 2 preempts state blue-sky registration and qualification. For a nationwide offering, that single feature can save $50,000 to $70,000 in state filing fees plus $80,000 to $100,000 in state legal work, according to SEC estimates.
Raise continuously. A qualified offering can stay open and accept investment on a rolling basis for up to two years, which suits companies that want to raise as they hit milestones rather than in a single closing.
Keep a path to trading. Tier 2 securities may be listed on a national exchange if the company applies and meets listing standards — at which point fuller public-company reporting kicks in. Companies not ready for an exchange can pursue quotation on the OTCQB or OTCQX tiers, where a sponsoring broker-dealer files a Form 211 with FINRA, a process that typically takes four to eight weeks.
Who Is Allowed to Use Regulation A+
Eligibility is narrower than founders often assume. Regulation A is available only to companies organized in the United States or Canada. The following issuers cannot use it at all:
- Investment companies registered under the Investment Company Act of 1940
- Blank-check companies and shell companies
- Issuers disqualified by the "bad actor" provisions, which bar companies whose officers, directors, major shareholders, or underwriters have relevant securities-law violations or criminal convictions
Most operating small and mid-size businesses clear these screens easily. The bad-actor check deserves early attention, though: one covered person's history can disqualify the entire offering, and discovering that after paying for an audit is a painful surprise.
How It Compares to Regulation CF and Regulation D
Founders usually weigh Regulation A+ against two alternatives, so here is the short version of that trade.
Regulation Crowdfunding (Reg CF) caps raises at $5 million per 12 months and must run through a registered funding portal or broker-dealer. It is cheaper and faster than Regulation A+, which makes it the better fit for community rounds under a few million dollars — but the cap and the intermediary requirement constrain larger ambitions.
Regulation D (Rules 506(b) and 506(c)) has no cap on raise size and involves far less paperwork — typically just a Form D notice filing. The catch is the investor base: 506(b) bars general solicitation and limits non-accredited buyers to 35, while 506(c) permits advertising but restricts buyers to verified accredited investors. If your strategy depends on thousands of small checks from ordinary customers, Regulation D cannot deliver it.
The decision rule of thumb: choose Regulation D when accredited capital is enough, Regulation CF for small community rounds, and Regulation A+ Tier 2 when you need more than $5 million from the general public.
Is Regulation A+ Right for Your Raise?
Run through this checklist before engaging counsel:
- Raise size. Are you targeting more than roughly $4 million? Below that, fixed costs eat too much of the proceeds.
- Investor base. Do you need non-accredited investors, or would accredited checks suffice? If the latter, Regulation D is cheaper.
- Audit readiness. Can you produce two years of GAAP financial statements that survive an independent audit? If your books need reconstruction, start there first.
- Marketing capacity. Can you fund and sustain a months-long public campaign? The filing qualifies you to sell; only marketing actually sells.
- Reporting stamina. Are you prepared to file audited annuals and reviewed semiannuals indefinitely? The reporting obligation ends only when you become eligible to exit, not when the raise closes.
Answering yes across the board still leaves execution risk — SEC comments, market timing, campaign performance — but it means the vehicle fits the journey.
Your Books Are the Offering
Strip away the securities-law vocabulary and Regulation A+ Tier 2 is, at its core, a test of your financial records. The audit, the offering circular's financial discussion, the related-party disclosures, the ownership tables, the annual and semiannual reports — every major deliverable is built on your books. Founders who treat bookkeeping as a chore to defer until "after the raise" discover that the raise itself is gated on the books being immaculate today.
That is an argument for keeping clean, complete, reconcilable records from day one: every bank account tied out monthly, every equity grant documented, every loan from a founder recorded as the related-party transaction it is. Plain-text accounting makes this discipline easier to sustain, because your entire ledger lives in version-controlled text files you can diff, review, and hand to an auditor without exporting from a black box. If you are new to the approach, the guides in /docs/ walk through the fundamentals, and the Fava dashboard turns the same ledger into the visual reports your future auditors will want to see.
Keep Your Financials Raise-Ready From Day One
Whether you pursue a Regulation A+ offering or a simpler path, investors and auditors alike will judge you on the quality of your records. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and build the audit-ready books your next raise will demand.
