Reg CF investors do great in a Reg A+
We've been getting some questions about our planned Reg A+ and how that impacts Reg CF investors. The short story is that anyone who invests in a Reg CF can be expected to do great in a subsequent Reg A+.
The terms of the SAFE note in the Reg CF that are really advantageous are the Discount (e.g. 20%) and the Valuation Cap (e.g. $10M). Generally, investors get to pick one or the other but not both when their SAFE's convert. In a subsequent Reg A+, a SAFE note holder is most likely to benefit from the Valuation Cap.
A Reg A+ is sometimes called a "mini IPO". A share price is set and investors convert to common stock. So, let's say we manage to raise $25M at an effective valuation of $75M (giving away 33% of the company to new investors in the Reg A+). That would mean investors in a Reg CF with a $10M price cap are doing roughly 7x better than the Reg A+ investors. Each one of their dollars gets 7x as many shares. Investors with a $7M cap would get 10x as many shares. It's a great place to be!
Our lawyers want me to mention that we are updating people on our Reg CF here, not inviting anyone to invest in the Reg A+ yet (we aren't allowed to do that without SEC approval). Our Reg CF is currently open here on Wefunder and we ARE encouraging you to invest here and now in the CF.
Also, we aren't making any promises about valuations, amount raised, or anything else. There are other investors converting as well and a few moving parts we don't have nailed down yet and won't until our Reg A+ application is finalized, which we expect in the next week or two. We are just doing our best and sharing with you the numbers we are currently working with as we think they are the most realistic.
In the end, if we pull off the Reg A+ as hoped, our Reg CF investors will do great. It could mean a several fold increase in valuation in just a few months. A great place to be!