In this discussion with Rod Turner, Founder, Chairman and CEO of Manhattan Street Capital, we discuss the size of the Regulation A+ market for raising capital for your private company.
Patrick: How big is the Reg A+ market likely to become over time?
Rod: I’ve done a lot of work on this, starting from different points and different assumption sets to build scenarios. When I do that, I look to see that the results are similar. If so, then I’m okay. If they’re very different, then I know I have a problem. Essentially, $50 billion to $60 billion of growth capital will be raised using Reg A+ based on my assumptions.
Patrick: Over what period of time?
Rod: Per annum, once it’s fully established.
Patrick: That’s huge.
Rod: Yes, it is. It makes sense if you look at the size of the angel and VC business, which is $75 billion a year in the US only. That’s an average year, not a good year. Initial public offerings and secondaries follow the same companies raising $140 billion a year in an average year.
Patrick: Is that global?
Rod: No, that’s only in the US. Because Reg A+ is US-centric in the sense that companies need to have their headquarters here. Using it as the basis, all of the startup companies are well supplied in general. The companies that are strong enough and far enough along that they can do a regular IPO raising an average of $300 million in that initial public offering, that’s $140 billion. It makes sense. It’s bigger sometimes, at $250 billion a couple of years ago.
For all of the mid-stage companies, and there are more than one million of them, setting aside startups, of the companies that are established and don’t have a good place to go to raise sizeable amounts of growth capital, $40 billion or $50 billion is right in the zone.
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.