By Vanessa Malone

Currently, companies seeking to raise capital by issuing securities go about it in two ways. They could register and offer their securities to the public through what’s known as an initial public offering “IPO” or they could issue their securities to select investors through what’s known as a private placement.

Under federal securities laws, a company can only offer or sell securities if the offering has been registered with the Securities and Exchange Commission “SEC” or if an exemption from registration is used. A combination of fewer regulations, requirements, and costs are pushing companies towards exempt securities offerings. The most popular among these are Regulation D (Reg D), Regulation A+ (Reg A+) and Regulation Crowdfunding(Reg CF).

Just how popular, you ask?

In the last few years, the amount of capital raised through exempt securities offerings has outpaced the level of capital formation through registered securities offerings.

In 2019, registered offerings raised $1.2 trillion in capital while an estimated $2.7 trillion was raised through exempt offerings. 69.2% of all new capital raised was through the exempt securities offering market.

Within the exempt securities market, Reg D was responsible for the most amount of capital raised which is only accessible to high-net worth individuals.

But the everyday investor may soon be able to gain more exposure to high-quality deals and get in on the ground floor of companies they believe in.

While Reg D is only accessible to accredited investors, Reg CF and Reg A+ are open and marketed to the general public. On March 4, 2020, the Securities and Exchange Commission “SEC” announced that it has voted to propose a set of amendments to simplify and improve common securities exemptions issuers use to raise capital. You can find an overview of the SEC’s proposed amendments in our previous blog here.

In brief, accessibility and investor eligibility are about to get a much needed upgrade.

For Reg CF

  • Capital raising maximum would increase from $1.07 million to $5 million. This could entice more established companies to utilize this exemption, and in turn give investors exposure to early stage investment opportunities from a new set of high-quality issuers.
  • Investment limits for accredited investors would be revised with a new calculation method for non-accredited investors so they may rely on the greater of their annual income or net worth. This would allow investors to invest more and have greater ownership in the companies they invest in.

For Reg A+

  • The capital raising maximum under Tier 2 would be raised from $50 million to $75 million and maximum offering amount for secondary sales under Tier 2 from $15 million to $22.5 million. This would allow issuers to continue to raise more capital utilizing this exemption and could also entice larger, more established companies to leverage Reg A+, bringing unprecedented early-stage opportunities to investors.

While these proposed amendments are great, we believe there are still some upgrades to the infrastructure for Reg CF and Reg A+ that need to be made.

One of the most pressing issues is that there are no active trading venues currently licensed in the U.S. for Reg CF secondary trading and only a handful of Reg A+ securities are trading on a secondary market.

We believe that in order to support both issuer and investor demand, liquidity needs to be part of the equation.

We believe Horizon has the key to this. Our one-stop-shop from issuance through to secondary trading has the ability to turn illiquid securities into electronically tradeable assets. Stay tuned to learn more about how our solutions will fuel the Reg A+ and Reg CF market.

About Horizon

Horizon offers a one-stop-shop from issuance through to secondary trading. To learn more, visit Horizon’s $5 million series A round is now open for investment. Please reach us at to receive investment materials.


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