An Example of Community-Focused Capital Raising Using Regulation A+
Client: Angel Studios
Offering Type: Regulation A+
Capital Raised: $55 million
Timeframe: 13 days
Broker-Dealer: Rialto Markets (FINRA member)
Overview
Angel Studios is an independent film and television studio known for producing and distributing audience-supported content. The company has built a large, engaged community around its projects by inviting audiences to participate in the content selection and distribution process.
To support its business objectives, Angel Studios pursued a capital raise using Regulation A+, an SEC-qualified exemption that allows companies to raise capital from both accredited and non-accredited investors. With the support of Rialto Markets as broker-dealer, Angel Studios completed a Regulation A+ offering that raised $55 million over a 13-day period.
This case study describes how Angel Studios utilized Regulation A+ as part of its broader capital-raising strategy.
The Challenge
As Angel Studios expanded its production and distribution efforts, it sought additional capital while maintaining its operational and creative approach. Traditional financing options can involve trade-offs related to ownership structure, governance, or long-term strategy.
In evaluating its options, Angel Studios was interested in a capital-raising structure that:
- Allowed participation from a broad base of supporters
- Aligned with its existing audience-driven business model
- Provided flexibility relative to certain traditional funding alternatives
The company also viewed capital raising as an opportunity to further engage its audience by allowing supporters to participate as investors, where appropriate.
The Approach: Regulation A+
Angel Studios elected to pursue a Regulation A+ offering, which permits eligible companies to raise up to $75 million in a 12-month period, subject to SEC qualification and ongoing reporting requirements.
Key characteristics of Regulation A+ relevant to this offering included:
- Expanded Investor Eligibility
Regulation A+ allows investment by both accredited and non-accredited investors, subject to applicable limits, enabling broader participation than many private offerings. - Public, SEC-Qualified Structure
Offerings are reviewed and qualified by the SEC, providing a standardized disclosure framework for investors. - Flexibility in Capital Formation
Regulation A+ can be structured to support a range of issuer objectives, depending on the company’s business model, investor base, and market conditions.
Rialto Markets acted as broker-dealer in connection with the offering, supporting regulatory compliance, investor onboarding, and transaction execution.
Outcome
Following SEC qualification, Angel Studios completed its Regulation A+ offering, raising $55 million over a 13-day period.
Outcomes of the offering included:
- Capital Raised for Business Purposes
The proceeds provided funding to support Angel Studios’ ongoing operations and content initiatives, consistent with the disclosures in its offering materials. - Broad Investor Participation
The offering included participation from a large number of investors, many of whom were already familiar with the company’s content and mission. - Increased Stakeholder Engagement
The offering allowed certain supporters to become investors, further aligning audiences with the company’s long-term objectives.
Role of Rialto Markets
Rialto Markets served as the broker-dealer of record for Angel Studios’ Regulation A+ offering.
Rialto’s role included:
- Assisting with the structure and execution of the Regulation A+ offering
- Supporting compliance with applicable broker-dealer and offering requirements
- Providing technology-enabled processes for investor onboarding and transaction management
Rialto Markets did not guarantee any particular fundraising outcome.
Considerations for Issuers
Angel Studios’ experience illustrates one way in which Regulation A+ may be used as part of a company’s overall capital-raising strategy. Outcomes of Regulation A+ offerings vary significantly based on factors such as:
- Issuer profile and business model
- Market conditions at the time of the offering
- Investor demand and outreach efforts
- Offering structure and terms
Companies considering Regulation A+ should evaluate whether the exemption is appropriate for their specific circumstances and objectives.
Conclusion
This case study describes Angel Studios’ use of Regulation A+ to raise capital while engaging a broad investor audience. Regulation A+ is one of several capital-raising options available to eligible companies and may be appropriate in certain situations.
Rialto Markets works with issuers to navigate the regulatory and operational aspects of Regulation A+ offerings, allowing companies to focus on their business while complying with applicable requirements.
Important Disclosure
This case study is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities. The results described represent a single issuer’s experience and are not indicative of results that may be achieved by other companies. Capital-raising outcomes vary based on numerous factors, and past performance is not a guarantee of future results.