Three "Mini-IPOs" You Can Invest in Now

By Matthew Milner, on Wednesday, June 24, 2015

Game on.

After 83 years of being forced to sit on the sidelines, every U.S. citizen is now legally allowed to invest in start-ups.

It doesn’t matter how much you earn…

And it doesn’t matter how much you’re worth…

Thanks to a new law that went live last Friday, now you can invest in promising early-stage companies before Wall Street gets its hands on them.

Are you ready?

Because we’re about to introduce you to three start-ups you can invest in right now.

Blast Off

Before we dive in, let’s look at the historic legal change that’s making this possible.

The change is baked into a new set of laws called “The JOBS Act.”

The JOBS Act allows you to invest in private companies, even if you’re not wealthy.

Last Friday, one of its key provisions went into effect—something called “Reg A+.”

Any U.S. business can take advantage of Reg A+ to raise capital from investors like you—but due to the relatively high legal costs of this approach, the most likely candidates are later-stage start-ups.

You see, later-stage start-ups have revenues, as well as a significant staff, so they’re better equipped to handle the procedures and costs.

In fact, the procedures a company needs to follow for a Reg A+ offering are similar—although far less demanding—to the procedures for an IPO…

Which is why many folks are referring to these offerings as “Mini-IPOs.”

Here’s how the Reg A+ process works in a nutshell.

Get Your Feet Wet

First, a start-up that’s seeking capital posts a description of its business online.

It’s not actually selling shares at this point…

It’s just “testing the waters” to see if there’s interest from investors like you.

If you like what you see, you can “reserve” shares in the company…

Minimum reservations can be as low as $100, and you’re free to back out later if you want to. You have no obligation at all.

Then, if the company receives enough interest from investors, it will seek approval from the U.S. Securities and Exchange Commission (the “SEC”) to start selling shares.

As soon as it gets approval, the start-up will contact you to confirm your interest.

That’s it.

Three Start-ups

Now that you know the process, let’s look at a few start-ups using Reg A+:

Elio—This transportation company is aiming to manufacture an “ultra-high-mileage” two-seater car with an expected sticker price of $6,800.

With glowing press from such outlets as The Wall Street Journal and Forbes, a board of directors that includes the former CEO of DaimlerChrysler, and $290 million in pre-orders for its cars, this is an opportunity to get in early on what might become the next Ford or Tesla.

StarShop—This is an e-commerce start-up where celebrities from Eli Manning to Rhianna do short videos to promote or endorse products.

Founded by Kevin Harrington, creator of the “infomercial” (and one of the sharks on the TV show, “Shark Tank”), StarShop has recently been featured in PeopleE Online, and The New York Times.

WayBetter—This start-up incentivizes people to lose weight by having them compete with others online for real cash prizes. Since 2013, its customers have lost over 3 million pounds. Currently, the company supports more than 270,000 “players” in over 100 countries, and its winners have received over $12 million.

Do people really want to track their fitness and “compete” about their weight?

Well, as one point of reference, the fitness-tracking device company FitBit (NYSE: FIT) went public last week—

And it currently enjoys a market cap of $7.8 billion.

Now, to be clear, we’re not recommending these particular start-ups—

But it’s certainly exciting that companies like these are raising capital using Reg A+.

More Coming Soon

Today we looked at three start-ups taking advantage of Reg A+…

But soon, we expect there to be an avalanche of these companies…

You’ll find them on special websites known as “Funding Platforms.”

These are websites that play “matchmaker” between private companies seeking capital, and investors like you who are looking for high returns.

WayBetter, for example, is on a platform called SeedInvest

StarShop is on a platform called BankRoll

And Elio is raising money on StartEngine.

Yesterday, I spoke with Ron Miller, the co-founder of StartEngine, to hear his thoughts about Reg A+. Here’s what he had to say:

“Giving the general public investment access to promising young companies like Elio—companies that could become the ‘the next big thing’—is a monumental change. We’re incredibly excited to be part of this new world.”

All of us here at Crowdability wholeheartedly agree.

To learn more about how the funding platforms work, check out this special video we made for you »

And here’s a video we made about Reg A+ »

Please note: Crowdability has no relationship with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Matthew Milner

Founder
Crowdability.com

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Tags: SeedInvest FitBit The Jobs Act Shark Tank Reg A+ Elio StartEngine Mini IPO

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