Regulation A+ Crowdfunding

Abstract

Using a hand-collected data set on the Regulation A+ filings, I provide detailed information on the age, size, number of employees, financial statement items, and industrial and geographical distributions of companies that use Regulation A+. Testing the effect of Regulation A+ on the local economy, I find that the amount raised through this method of financing is negatively associated with ensuing unemployment rate. In addition, I investigate whether this new method of financing is substituting or complementing venture capital (VC) financing. The data analysis shows that Regulation A+ facilitates access to financing in regions and industries that could not attract VC-financing ex-ante. Finally, I find evidence consistent with successful Regulation A+ offerings in a region attracting ensuing VC investments through decreasing uncertainty and search cost.

Keywords: Regulation A+, JOBS ACT, Crowdfunding, Venture Capital, Local economy

JEL Classification: G28, G24, M13,