Local Tech Company Fundraises for 'Mini-IPO'
The Securities and Exchange Commission (SEC) was recently notified by LocatorX—a Jacksonville technology company that aims to create the next generation of GPS—with their intention to hold a public direct offering to raise between $345,000 and $25 million. This amount is an untraditional and seldom-used approach to initial public offerings (IPOs), which is more preferred and usually raise millions for new public companies.
Holland & Knight Partner Ivan Colao told Jacksonville Business Journal that LocatorX's offering is "made possible by an SEC provision that allows companies to raise smaller amounts of money than an IPO would raise and to forego more onerous financial disclosures that public companies must release."
LocatorX is one of the early users of Tier 1 of Regulation A. Since Tier 1's cap was raised from $5 million, it now can raise closer to $20 million typically, whereas Tier 2 raises $50 million at most.
"If you can do a traditional IPO, you're in a good position. Companies aspire to that," added Mr. Colao. "I don't completely frown on Reg. A, but I think companies with a choice wouldn't do it. [However,] it's really a company by company analysis."
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