Alternative lenders are reassessing their operations as the federal Regulation A+ approaches implementation. The legislation, which was finalized earlier this year, alters the guidelines on who can become a qualified investor when startups and SMEs turn to crowdfunding to access capital.
The new rules are set to go into effect in just a few weeks, and in anticipation, alt-lending platform StartCapital.com revealed Sunday (May 31) that it is overhauling its business in anticipation of Regulation A+.
The company revealed in a press release that it has launched a new website and revamped its branding and logo, though it remains focused on providing startups and SMEs a platform to access funding. The company will additionally launch new operations to provide funding sources for the real estate sector in adherence with the new legislation.
“We’re already seeing great interest in sourcing capital through Reg A+ and we expect this demand will only grow,” said StartCapital.com’s Managing Director Jake Durrant.
StartCapital.com’s decision to revamp its brand could signal a new trend among investors as Regulation A+ takes shape, potentially urging financial backers to turn to more secure markets like real estate.
“While startups are often very sexy, it can be difficult to sell investors on the idea that their investment is safe, particularly if nothing exists except for some intellectual property and potential in a group of entrepreneurs,” Durrant added.
Despite the real estate investment venture, StartCapital.com said it would continue providing alternative sources of working capital for seed-stage, startup and SME businesses. The platform works directly with the federal Small Business Administration to help SMEs access debt financing, lines of credit and asset-based lending. These initiatives will continue by complying with Regulation A+ crowdfunding rules, the company said.
“We’re most excited about our partnership with the right investment groups who’re generally interested in sourcing and paying for the costs of Reg A+,” Durrant added. “Since June 19th marks the beginning of Reg A+, we wanted to be ready when demand for mini-IPOs really opens up.”
Perhaps the most-discussed aspect of Regulation A+ is the likely emergence of such “mini-IPOs” stemming from the altered guidelines that raise the cap that SMEs can raise through a small public offering to $50 million, up from just $5 million.