Capital Raising Through Regulation D

Vladimir Ivanov*
Senior Financial Economist
U.S. Securities and Exchange Commission

*The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or
statement of any of its employees. The views expressed herein are those of the author and do not necessarily reflect the
views of the Commission or of the authors colleagues upon the staff of the Commission.

Public vs. Private Capital Raising

1,500

1,250

1,000

Amount Raised ($ billion)

750

500

250

0
Registered debt

Registered equity

2009

2010

Reg D

2011

2012

Rule 144A

2013

Other private*

2014

* Other private include Reg S and other Section 4(2) offerings

Sources: EDGAR Form D and Form D/A filings for Rule 504, 505, and 506 offerings; Thomson Financial for all others

Issuers in the Reg D Market

Total
capital
raised ($
billions),
2009-2014

Hedge Funds

$388

Other Investment Funds

$426

Private Equity Funds

$316

Non-Financial Issuers (Operating)

$133

Financial Services

$17

Real Estate

$21

Venture Capital Funds

$30
$0

$500
2009-2013

Number of
new
issuances,
2009-2014

$1,000

$1,500

$2,000

$2,500

2014

Non-Financial Issuers (Operating)

12,389

Hedge Funds

1,848

Real Estate

2,789

Financial Services

1,145

Other Investment Funds

1,603

Private Equity Funds

1,550

Venture Capital Funds

680
0

Source: EDGAR Form D filings and Form D/A (amended) filings

10,000

20,000

2009-2013

30,000
2014

40,000

50,000

60,000

70,000

Rule 506(b) vs. Rule 506(c)

September 23, 2013 - December 31, 2014

Form D
Filings

Number of
Amendment
Filings

Total amount
sold
($ billions)

Mean amount
sold
($ millions)

Median amount
sold
($
millions)

506(c)

2,117

822

$33

$13

$0.7

506(b)

24,500

17,370

$1,520

$26

$1.6

All 506

26,617

18,192

$1,553

$25

$1.5

Regulation D**

27,710

18,350

$1,555

$24

$1.4

Exemption

Source: EDGAR Form D filings from September 23, 2013 to December 31, 2014.

Rule 506(b) vs. Rule 506(c)

September 23, 2013 - December 31, 2014

Rule 506(c): Amounts Raised

Funds Incremental
23%

FundsInitial
41%

Rule 506(b): Amounts Raised

Non FundsInitial
34%

Non Funds Incremental

2%

Funds Incremental
43%

FundsInitial
44%

Source: EDGAR Form D filings from September 23, 2013 to December 31, 2014.

Non FundsInitial
11%
Non Funds Incremental
2%

Most active non-fund issuers by

amount sold: 2009 -2014
10.1%

Banking

33.2%
16.0%
17.2%

Other
Real Estate

12.5%
12.5%

Technology

12.4%

37.5%

8.8%
9.0%
10.0%
8.5%

Health Care
Energy
Manufacturing

1.6%

Retailing

1.6%
1.4%
0.3%
0.8%
0.8%
0.6%
0.2%
0.3%
0.5%
0.2%

Agriculture
Business Services
Restaurants
Travel
0%

3.8%

5%

10%

15%

2014

20%

25%

30%

2009-2013

Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

35%

40%

Distribution of non-fund issuers by

reported revenue: 2009-2014
Over $100 million

1.4%
0.9%

$25 milion - $100 million

1.6%
0.8%
3.3%
2.1%

$5 million - $25 million

5.0%
4.3%

$1 million - $5 million

12.7%
11.1%

$1 - $1million

17.6%
15.6%

No Revenues
2.7%
1.9%

Not Applicable

55.8%

Decline to Disclose
0%

10%

20%

2009-2013

30%

40%

2014

Source: EDGAR Form D filings from 2009, to 2014. Amended (Form D/A) filings excluded

50%

60%

63.1%
70%

Issuer state of solicitation, incorporation

and primary place of business: 2009-2014
DE
NV
MD
NC
GA
OH
CT

States of Incorporation

PA

States of Solicitation

CO

Principal States of Business

WA
IL
FL
MA
TX
Soliciting in
All States------>

Foreign Issuers

NY
CA
0

10,000

20,000

30,000

40,000

50,000

Source: EDGAR Form D filings in 2009-2014. Excludes capital raised through amended offerings Form D/A.

60,000

Investors in the Regulation D market

September 23, 2013 - December 31, 2014

Total number of
investors

Mean investors per offering

Median investors per offering

All new offerings

All new
offerings

New offerings
that report
investors

All new
offerings

New offerings
that report
investors

20,563

10

15

Funds

7,202

17

22

15

Non-Funds

13,361

12

343,872

14

17

Funds

114,480

17

25

Non-Funds

229,392

13

15

Rule 506(c)

Rule 506(b)

Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Use of financial intermediaries by type

of Regulation D issuer: 2009-2014
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Hedge Fund

Private Equity Venture Capital

Fund
Fund

Other
Investment
Fund

2009-2013 % Offerings with Intermediaries

Financial
Services

Real Estate

Non-Financial
(Operating)

2014 % Offerings with Intermediaries

Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Total fees paid by type of Regulation D

issuer: 2009-2014
7%
6%
5%
4%
3%
2%
1%
0%
Hedge Fund

Private Equity
Fund

Venture Capital
Other
Fund
Investment Fund

2009-2013 Avg total fees

Financial
Services

Real Estate

2014 Avg total fees

Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Non-Financial
(Operating)