Crypto Miner Cannan Raises $90 Million in NASDAQ IPO, Shares Decline

Canaan AvalonMinerYesterday, Canaan Inc. (Nasdaq: CAN) a Chines crypto mining company,  completed an initial public offering (IPO) of 10,000,000 American Depositary Shares (ADSs), each representing 15 Class A ordinary shares. Shares were issued at US $9.0 per share for a total offering of US $90 million.  assuming the underwriters do not exercise their option to purchase additional ADSs.

Shares in Canaan initially popped but have since dropped below the IPO price and now trade around $8.30 a share.

The underwriters have been granted an option, exercisable within 30 days from the date of the final prospectus, to purchase up to an additional 1,500,000 ADSs at the IPO price less the underwriting discounts and commissions.

Citigroup Global Markets Inc., China Renaissance Securities (Hong Kong) Ltd., CMB International Capital Ltd. are the active joint book-runners of the offering.

According to a filing with the SEC, initial lead underwriter Credit Suisse Group AG, exited the deal before the IPO.

Canaan was launched in 2013 and benefited from the crypto-boom. Canaan’s products include various iterations of its AvalonMiner machines designed to effectively mint various proof of work cryptocurrencies.

During the past year or so, the shine has come off some of the crypto mining businesses as prices of various cryptocurrencies have declined. Bitcoin, the most popular crypto, is well off its all time high of around $20,000 but BTC has traded higher during 2019. Currently, Bitcoin trades around $7000.

Sydney-based Tyro Payments Files Prospectus for Conducting an IPO, Aims to Raise $173.2 Million

Sydney-based Tyro Payments, an Australian Fintech institution that specializes in merchant credit, debit and EFTPOS acquiring, submitted a prospectus on November 18 for conducting a local initial public offering (IPO) that aims to raise A$252.7 million (appr. $173.2 million).

Founded in 2003 by Peter Haig, Andrew Rothwell and Paul Wood, Tyro Payments was previously called MoneySwitch Ltd. Tyro is reportedly the second Australian firm to be issued a Specialist Credit Card Institution (SCCI) license (after GE Capital).

Tyro received a banking license in 2015, which made it an “Authorized Deposit-taking Institution (ADI).”

The institution’s IPO plan has been announced at a time when six recent listings were aborted last month. This indicates that Australia’s IPO market has become a lot tougher, as investors are looking for lower prices in order to protect against potential post-float losses.

Tyro Payments is targeting an indicative price range of around A$2.50 to A$2.75 per share. This, according to the recent prospectus shared with the Australian Securities and Investments Commission.

At a share price of A$2.75, Tyro Payments would be valued at around A$1.36 billion (appr. $0.92 billion). The retail offer is scheduled to begin on November 26, and trading will start on December 6.

Tyro first revealed its IPO plans in October 2019. The company said it was seeking a valuation of A$1.5 billion (appr. $1.1 billion).

Tyro Payments’ main global competitors include companies such as San Francisco-based Square Inc.

Tyro reported losses of around A$18.68 million for the period ending in June 2019. The company notes in its prospectus that it is expecting the fourth straight yearly loss in 2020.

Tyro Payments chairman David Thodey stated:

“Tyro is a great Australian success story, with a history of innovation underpinned by a culture that puts the customer at the core of the business. Over the past 16 years the Company has grown to become Australia’s fifth largest merchant acquiring bank by terminal count, with strong aspirations for the future.”

He added:

“I am delighted to have the opportunity to invite new shareholders to join us in the next stage of the Tyro journey as we build upon our solid foundation to pursue an exciting growth strategy.”

Tyro Payments CEO Robbie Cooke noted:

“Central to our mission is supporting small to medium business in Australia with better solutions for their payment and banking needs. As a tech-driven enterprise we are well placed to understand and assist in reducing the friction they often experience in their payments and banking activities.

Cooke also mentioned:

“Our focus remains firmly on challenging the status quo for the benefit of our merchants. I am particularly excited that Tyro merchants have the ability to invest in our future success by participating in our merchant offer.”

Payments Software Firm Bill.com Is Planning to Raise $100 Million via an IPO

Payment software firm Bill.com is planning to raise $100 million through an initial public offering (IPO), according to a recent filing with the US Securities and Exchange Commission (SEC).

Established in 2006 by PayCycle co-founder René Lacerte, Bill.com provides cloud-based business payments and offers a software platform that’s designed specifically for the SMB market. Bill.com’s clients include Gusto, Thumbtack, Dialpad, and several accounting companies.

The California-headquartered firm has raised around $347 million since its launch. In April 2019, Bill.com raised $80 million via an investment round led by Franklin Templeton Investments, which made it a unicorn. Temasek Holdings and DCM Ventures also took part in the round.

Bill.com’s investors also include MasterCard, Fidelity, Silicon Valley Bank and Bank of America.

During its April 2019 fundraise, Bill.com’s management noted that the platform had over three million members who were either paying other merchants or were receiving payments via Bill.com’s platform. The company also revealed at the time that it handled over $60 billion in yearly payments. According to Bill.com’s SEC filing, the firm has more than 81,000 customers that are using its platform “to manage their financial workflows and process their payments.”

Goldman Sachs, BofA Securities, Jeffries and William Blair have been listed as underwriters for Bill.com’s IPO. Pricing terms for the public offering have not been shared publicly. The firm’s shares will be tradable on the New York Stock Exchange (NYSE) under the ticker “BILL.”

During Q3 2019, Bill.com generated around $35.2 million in revenue, which is notably a 57% year-over-year growth when compared to $22.4 million in revenue for the same time period last year. Bill.com’s total revenue has increased 71% between Q3 2017 and Q3 2018.

The company has significantly increased its sales and marketing expenditure. It spent $32.3 million on marketing during Q3 2019.

Bill.com reported around $5.7 million in total losses during Q3 2019, which is up 544% from the same time period last year.

SPAC: FinServ Announces Close of $250 Million Initial Public Offering

FinServ Acquisition Corp. (NASDAQ:FISRVU)announced on November 5 that it had closed its initial public offering (IPO) of 25,000,000 units, which included 3,000,000 units issued “pursuant to the exercise by the underwriters of their over-allotment option.” The company’s offering was set at $10.00 per unit, which netted gross proceeds of $250 million. FinServ is a special acquisition company (SPAC) seeking to invest in the Fintech sector.

FinServ’s units are listed on Nasdaq and began trading under the ticker “FSRVU” on November 1, 2019. Each unit consists of “one share of the company’s Class A common stock and one-half of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share,” according to a release.

As mentioned in the announcement, only whole warrants are exercisable and tradable. The shares of class A common stock and warrants will trade on Nasdaq under “FSRV” and “FSRVW” respectively after the securities compromising the unit start separate trading.

As noted in the release: “The Company is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While the Company may pursue an initial business combination target in any business or industry, it intends to focus its search on companies in the financial services industry or businesses providing technology services to the financial services industry.” 

Lee Einbinder is FinServ’s CEO. Howard Kurz is the company’s president and CFO.

According to the release, Barclays and Cantor served as the joint book-running managers of the firm’s offering.

A sum of $250 million ($10.00 per unit sold via the public offering) has been placed in FinServ’s trust account. These funds were generated from the IPO and a private placement of units.

The firm’s audited balance sheet (as of November 5, 2019), which reflects receipt of the proceeds from the IPO and private placement, will be part of a Current Report on Form 8-K. These documents will be submitted to the US Securities and Exchange Commission (SEC).

Bitmain, World’s Largest Manufacturer of Cryptomining Hardware, Files for IPO in New York

On the heels of yesterday’s news that competitor Canaan has filed an IPO prospectus to go public on the Nasdaq comes a report that Bitmain, the world’s largest manufacturer of cryptocurrency mining hardware, is also seeking to go public on a New York Stock Exchange.

The application is being sponsored by Deutsche Bank, Tencent News reports.

Bitmain, Canaan and Ebang, Chinese companies that together dominate the manufacture of high-performance cryptominers, had all applied previously for the right to conduct an IPO in Hong Kong.

All three company’s applications were either rejected or lapsed after Hong Kong regulators’ expressed concern that early-stage super profitability in crypto had been eclipsed by a persistent and perhaps permanent market downturn affecting the entire mined cryptocurrency space.

Bitmain promised Hong Kong securities regulators that  it intended to move operations off of an almost exclusive historical focus on cryptomining and onto AI and supercomputing. Regulators were unconvinced of the company’s track record in those areas, however, and noted that forthcoming regulation of cryptocurrencies would likely cut into company profits.

In its latest report, Tencent News quoted a January 2019 conversation it had at the World Economic Forum in Davos with Li Xiaojia, president of the Hong Kong Stock Exchange regarding Bitmain’s bid for a Hong Kong IPO:

“For the IPO, the core principle of the HKEx is marketability (suitability). Is the business model introduced by the listed company to investors suitable for listing? For example, in the past, it has earned billions of dollars through the A business, but suddenly said that it will do B business in the future, but there is no performance. The model is better, then I feel that the A business model that you brought to the market has not been sustainable. There is no supervision before, and then the supervision is started, then you can still do this business, can you make this money?”

The outlet also quoted a remark an individual called Tension made on a Chinese social media site suggesting that crypto may never recover territory it lost in the crypto crash of the past few years:

“The blockchain industry itself is not easy and controversial. There are scammers and idealists, geeks and speculators. Surviving and advancing in the cracks, only one bit of land has emerged in five years, and in the next ten years, There may not be a second one.”

Tencent expects that Bitmain’s IPO application will undergo,”three rounds of inquiries…and other procedures,” and could take between one and two months to complete.

Bitmain has reportedly enlisted the help of Zheng Hua, a former representative of Nasdaq in China, as a consultant to the undertaking.

Cryptomining Hardware Company and Bitmain Competitor Canaan Files for IPO on Nasdaq

After an application to go public in Hong Kong lapsed last year, Canaan, the second-biggest maker of cryptocurrency mining hardware after Bitmain, has brought its bid to go public to New York.

According to a registration statement submitted to the SEC in Washington, Canaan plans to sell American depositary shares (ADS) Class A hoping to raise up to USD $400 million.

During the first 6 months of 2018, Canaan posted Net Income of RMB 216.8 million. During the first 6 months of 2019, that number went the other direction as Canaan posted a loss of RMB 330.9 million (Approx. $ 48.2 million).

If approved, shares will be sold to the public via the Nasdaq Global Market under the ticker symbol CAN.

A source to Bloomberg predicted the move early this year, and said the company might be seeking to sell shares on a US exchange in order to motivate private investors to collectively contributed $1 billion USD to the company by the end of Q2 2019.

Chinese cryptomining giants Bitmain, Canaan, and Ebang all profited incredibly during the crypto boom of 2017, but have suffered in the subsequent contraction.

Many cryptomining customers of all three companies went out of business or scaled back as the crypto price balloon flattened in early 2018 and stayed mostly flat or low thereafter.

Sales of cryptominers have reportedly slowed considerably.

Bitmain and Ebang also proposed to go public in Hong Kong but did not make it.

It is believed that Hong Kong regulators were concerned about the future of cryptomining in general and the companies’ lack of experience in AI and standard data processing.

There is also a big push in crypto now to move away from cryptomining, which is incredibly resource-intensive.

In the New York application, Canaan touts its, “visionary management team,” and “clear strategy to commercialize supercomputing technology.”

The company says it still holds the number two position among manufacturers and sellers of Bitcoin mining machines globally and says its machines are used in 21.9% “of the combined computing power of all the Bitcoin mining machines sold globally.”

The company also touts the “outstanding performance of its,”self-developed neural-network accelerator, which is a class of microprocessor designed as hardware acceleration for AI applications.”

Other espoused competitive strengths include being, “a leading provider of supercomputing solutions”; “fast time-to-market”; “outstanding production track record and strong supply chain management.”

Growth strategies include supercomputing solutions, high power efficiency IC design, new AI products and enhanced AI platform business model, enhanced supply-chain management, and expansion of overseas operations.

Challenges include fluctuation of the Bitcoin price, regulation of Bitcoins and Bitcoin mining; “classification of cryptocurrency mining as an eliminated industry by PRC government authority,” and “constant technological changes in the industries we operate in,” among other factors.

 

WeWork’s Parent Company Makes Major Changes to Management of Business Operations

We Co., WeWork‘s parent company, is planning to make major changes to the management of its business operations after stakeholders expressed their dissatisfaction with the company’s unusual governance model ahead of its upcoming IPO.

The firm’s parent company had initially proposed that 20 votes should be given to WeWork’s founders and early backers for each share of Class A stock. However, the New York-based firm’s management has now decided to give only 10 votes each, according to a filing submitted ahead of the planned IPO.

As reported by CNN, the extra votes might turn into only a single vote, if company co-founder and CEO Adam Neumann passes away or becomes incapacitated.

Neumann currently has 2.4 million of the total shares, however, his stake does not make him a majority shareholder. Approximately 32.6 million are owned by venture capital firm Benchmark Capital Partners and its head and one of WeWork’s directors Bruce Dunlevie

Collectively, these super voting shares will have majority control of the company.

According to Friday’s filing, there will also be a change in how Neumann’s successor will be appointed.

Before the proposed change, Neumann would have been replaced by a successor (if he died or became incapacitated) that would have been appointed by a committee established by two of the firm’s directors and the CEO’s wife Rebekah Neumann.

However, the updated plan requires that the board of directors choose a successor, which is a common practice among public companies.

As noted in the company’s filing:

“We will not rely on a succession committee. Our board has the ability to remove our chief executive officer.” 

The filing also mentioned:

“No member of Adam’s family will sit on our board.”

WeWork’s latest filing comes shortly after several reports suggesting that the company might postpone or decide not to move forward with its public offering. 

There were also reports that the company’s valuation might be slashed, however, the updated estimated valuation was not mentioned in the recent filing.

WeWork’s management is seeking a valuation of around $20 billion for its upcoming IPO.

Previously, the company was valued at nearly $47 billion, according to research firm CB Insights. 

WeWork has been growing rapidly. During the first half of this year, it generated $1.5 billion in revenue, which is notably double what the company made during the same period in 2018.

Compared to 2016, WeWork’s revenue has grown by 250%. But the company’s losses have also increased significantly, as it recorded a net loss of $904 million during the first half of 2019 and a total loss of $4.2 billion since early 2016.

Last month, when We Work’s parent company filed paperwork to go public, it was criticized for how it conducted its business operations, particularly its huge losses, the unchecked power of its CEO,  and also failing to appoint a female board member.

Responding to the complaints, WeWork announced it would appoint its first female board member, Frances Frei, a professor at Harvard Business School (after completing its IPO). 

The company also said Neumann had agreed to repay the company $5.9 million in stock, which was received by his WE Holdings LLC, after selling the trademark “We” to The We Company. 

In January of this year, WeWork rebranded to The We Company, which serves as an umbrella company to the company’s wide range of businesses.

WeWork’s Management Might Slash Company Valuation to Under $20 Billion, May Also Delay IPO

US real estate company and shared office space firm WeWork might slash the valuation it’s seeking as a public company to under $20 billion. The New York-based firm is also considering postponing its IPO, according to the Wall Street Journal.

WeWork’s proposed valuation cut comes shortly after the shared office-space provider announced it was planning an IPO at around $20 billion, which is significantly lower than the $47 billion private valuation the company secured earlier.

WeWork’s management is reportedly preparing to approach investors who might be interested in acquiring the company’s shares, even though some investors want the real estate firm to postpone its IPO. 

The firm’s underwriters are planning to meet this week and consult with investors in order to work out details pertaining to WeWork’s public debut, the Journal noted.

The company intends to raise up to $4 billion through its IPO, while securing an additional $6 billion in debt, provided its public offering generates at least $3 billion, according to sources familiar with the matter. WeWork might not be able to sustain its level of growth without these funds.

Founded in 2010, WeWork’s management signs long-term leases for real estate properties, and then renovates and divides them into smaller office spaces. The rooms are rented out to individuals and companies under short-term contracts.

The company’s business model has been criticized as its losses increased by 25% to $905 million during the first half of this year, even though WeWork’s revenue doubled to more than $1.5 billion for the same period.

Investors have also expressed concerns about CEO Adam Neumann, who controls the majority of WeWork’s voting shares. Neumann reportedly raised $700 million by selling and borrowing against the real estate firm’s stock. He also charged around $6 million for the “We” trademark.

Big Exit: Crowdfunded on StartEngine Under Reg CF, Hylete Fitness Apparel Files S-1 to IPO on the NYSE

In 2017, Hylete Fitness Apparel raised $1 million on StartEngine, a leading US-based investment crowdfunding platform.

Jump forward two years later and Hylete has some good news for early investors. Hylete has filed for an initial public offering (IPO) with shares expected to trade on the New York Stock Exchange (NYSE).

StartEngine stated, “We’re happy for Hylete and wish them the best as they enter the final stretches of preparing to go public.”

According to the offer page, Hylete investors purchased Class B Common Stock at $1/share at a pre-money valuation of $25 million. The securities were issued under Reg CF.

Today, according to the S-1  filing, Hylete is looking to issue  Class A common stock at price per share of between $8 to $10.

While it is not immediately clear as to the impact of the investors who participated in the Reg CF offering, the S-1 states that Hylete intends to convert all outstanding shares of their preferred stock and all outstanding shares of their Class B Common Stock into shares of Class A Common Stock, prior to the date of the offering.

The Class A Common Stock offering will raise approximately $13.7 million, or $15.8 million if the underwriters exercise in full their option to purchase additional shares, assuming an initial public offering price of $9.00 per share.

Hylete is a “digitally native, fitness lifestyle company engaged in the design, development, manufacturing, and distribution of premium performance apparel for both men and women.”

While still reporting a loss, Hylete reports net sales for 2018 were $11,689,200, an increase of 33.2%, from net sales of $8,773,025 in 2017.

It will be interesting to learn how Reg CF investors make out. By listing on the NYSE (if it is approved), investors will have the option to sell their shares – an important opportunity to benefit from the investment and any capital gain.

 

Report: World’s Second Largest Maker of Cryptominers, Canaan, Plans US IPO

After its application to IPO in lapsed regulators’ hands last November in Hong Kong, Canaan, the world’s second-largest manufacturer of cryptomining hardware, has filed a confidential S-1 to pursue a US US initial public offering (IPO), according to Chinese media outlet Weixin reports. Canaan sells mining hardware under the Avalon brand.

If true, this makes Canaan, “the first ‘(mining) giant’ to officially…pursue a US IPO.”

According to Bloomberg, Canaan’s Hong Kong IPO bid sought to raise $1 billion USD with Morgan Stanley, Deutsche Bank AG, Credit Suisse Group AG and CMB International Capital Ltd acting as joint sponsors.

Bids to go public by Chinese crypto mining hardware rivals Bitmain and Ebang also failed in Hong last year as regulators reportedly expressed concerns about the businesses’ long term viability.

Cryptocurrency prices dropped by more than 80% in 2018, though they have recovered somewhat in recent months.

Reports indicate that, in their Hong Kong IPO applications, all three firms expressed plans to expand their services beyond cryptomining and into AI, but regulators determined that none of the companies showed a significant track record there.

Cryptomining uses an exorbitant amount of energy to secure and process transactions, and many crypto projects have been trying to establish other ways of securing their networks.

Secure alternatives have yet to be widely implemented, however, though the race is on to cut the costs implied by energy hungry mining.

Weixin reports that Canaan first tried to go public”through a ‘backdoor’ approach” on the Shenzhen Stock Exchange in 2016.

A deal proceeded, Weixin writes…

“Luyitong Electric Co., Ltd., a listed company of the Shenzhen Stock Exchange, issued a notice announcing the plan for major asset restructuring, with a proposed price of 3.06 billion yuan (including cash payment of 1.061 billion yuan and issuing shares of 1.99 billion yuan). A total of 14 shareholders bought all the shares, with a total transaction price of 3.06 billion yuan.”

…but was halted by regulators in the final hour:

“After the transaction, it was suspended by the Shenzhen Stock Exchange because of the ‘backdoor.”’

‘Bad luck’ struck again in 2017, Weixin writes, when, “(Canaan) once again sought to be listed on ‘the New Third Board’:

“However…in September of that year, the relevant government departments began to ban all cryptocurrency transactions and ICOs in the country. In the same year, in October and November of that year…(Canaan IPO applications were) rejected four times in a row… (which) impact(ed) (the) ability of the company to continue to operate. (Canaan) finally voluntarily gave up the listing in March of the following year.”

Despite having its 2018 Hong Kong IPO bid listed as “invalid” on the HKX website, in March Canaan announce that it had completed, “a new round of financing of hundreds of millions of dollars, with a post-investment valuation of billions of dollars,” according to Weixin. Coindesk subsequently reported that none of the money came from new investors.

Canaan’s marketing department has been contacted to confirm the story, and this article will be updated if they furnish comment.

Banq to Raise Capital for Helbiz in Advance of Planned IPO and Dual Listing on Nasdaq and AIM Italia

Banq, a digital platform that is part of investment bank Tripoint Global, is raising capital for Helbiz in advance of a planned initial public offering (IPO) on Nasdaq. Simultaneously, the shares are expected to list and trade on AIM Italia in what is being described as a first multilateral trading facility of its kind.

Headquartered in New York, Helbiz is an electronic scooter service where users may use an App to immediately rent the urban-friendly transportation. Helbiz is said to be the market leader in Italy. Italy’s Ministry of Transportation has recently approved nationwide use of electronic Scooters.

Helbiz currently has scooters operating in Milan and Malaga, with pilot programs in Italy in Rome, Turin, Florence and Pisa as well as pilot programs in Spain in Madrid, Marbella, Vitoria-Gasteiz and Palma de Mallorca. More pilot programs are said to be underway in Portugal, Greece, France, Singapore, and Georgia.

TriPoint Global Equities, working with its online division BANQ, will act as the lead managing selling agent and sole bookrunner for the offering in the United States. The company is utilizing Reg A+ to raise up to $15 million in advance of the planned public listing. Currently, investors may express their interest in a share purchase as Helbiz “tests the waters.”

Subject to NASDAQ requirements, Helbiz plans to list under the symbol “HLBZ.”

Helbiz intends to use the proceeds from the offering for expansion of its fleet of scooters, new territory deployment and working capital.

In connection with the potential listing on the AIM Italia, Intermonte will act as bookrunner, EnVent Capital Markets LTD will act as nominated adviser and Deloitte Legal as legal adviser.

Salvatore Palella, founder and CEO of Helbiz, said his team is laser-focused on providing a solution to the “first and last mile” problem in congested urban areas around the world.

“Our experience serving these markets has been invaluable, and it has informed our proven approach to new markets that involves working proactively with city leaders. Our business model and technology stand apart from other companies that touch this space, and in ways that positively impact our bottom line.”

Australian Online Lender Prospa Trades on ASX Following Successful IPO

Online lender Prospa has been admitted to the official list of the Australian Securities Exchange (ASX) following the successful completion of the IPO. According to a note from Prospa, the Fintech sold 29 million shares at $3.78/share raising $109.6 million.

Following settlement, Prospa will have 161.4 million shares outstanding valued at $609.9 million at the IPO price. Shares will trade under the ticker PGL on a “conditional and deferred settlement basis” from today, and on a normal settlement basis from June 17, 2019.

Shares turned higher following the listing on ASX trading at around $4.50/share.

Prospa stated that the majority of funds raised, above the amount raised to fund cash payments to certain existing shareholders, will be used for funding the equity portion of the company’s growing loan book and working capital, investment in new products and geographies and to repay corporate debt.

Prospa pointed to the involvement of long term investors including existing shareholder AustralianSuper, Australia’s largest superannuation fund.

Other existing long-term investors included London-based VC investor Entrée Capital, and Australian based VC investors AirTree Ventures and SquarePeg Capital. Neither sold equity in the IPO.

Entrée Capital, Greg Moshal and Beau Bertoli will be subject to escrow until after the Company’s financial results for the year ended on 30 June 2020 have been released to the ASX.

All other Escrowed Shareholders, including Square Peg Capital and AirTree Ventures, will be subject to escrow until after the reviewed financial accounts of the Company for the half year ended on 31 December 2019 have been released to the ASX.

Prospa is Australia’s top online lender serving the SME market. Prospa has originated over $1 billion in loans to date across Australia and New Zealand.

In Australia, the 2.3 million small businesses employ 44% of the private sector workforce and generate 35% of Australia’s GDP.

Report: Insurtech Lemonade Queues Up Initial Public Offering at $2 Billion Valuation

Insurtech Lemonade is going public. This is according to multiple reports indicating the early stage insurance company is going public at an approximate $2 billion valuation. Lemonade last raised capital in April with a $300 million round led by Softbank.

Lemonade may seek up to $500 million in the initial public offering (IPO) to fuel its global expansion plans.

We must note that crowdfunding platform OurCrowd is a shareholder in the Insurtech.

First picked up by Calculist, the report indicates that Lemonade has selected JP Morgan to lead the IPO.

The iconoclastic company continues to roll out its digital-first service across the US.

Presently, Lemonade offers homeowners and rental insurance in New York, California, Illinois, New Jersey, Nevada, Georgia, Pennsylvania, Maryland, Arizona, Michigan, Connecticut, Indiana, Ohio, Wisconsin, Oregon, Texas, Tennessee, Virginia, Iowa, Colorado, and the District of Columbia. Renters and condo insurance in Rhode Island; and renters insurance in New Mexico and Arkansas (homeowners and condo coming soon).

So far in 2019, Lemonade has added three states with Colorado announced just this past week.

While external observers may think it is crazy, Lemonade must apply to provide insurance at each individual state instead of one stop at the federal level.

In late 2018, Lemonade announced it was crossing the Atlantic to offer insurance in Europe. No date yet as to when the European Union will be able to use the Lemonade service but hopefully there will be some announcements later this year.

At the end of 2018, Lemonade reported a bit over $50 million in sales – more than 5X year prior – and insured homes were around 425,000 with a coverage value of about $50 billion. Currently, the loss-making firm is all about scaling.

Lemonade has always prided themselves on being transparent and avoiding everything we hate about traditional insurance – which is everything about traditional insurance. A simple process, low price and no traps, Lemonade wants to redefine how insurance is sold and delivered as a product.

Australias Largest Fintech Lender Prospa Plans Initial Public Offering for June

Australian Fintech Prospa has announced its intent to complete an initial public offering (IPO) on the ASX on June 11, 2019.

Prospa was founded by Greg Moshal and Beau Bertoli in 2012 with seed funding from Entrée Capital. The online lender originated its first loan for $20,000 that same year. As of 2019, Prospa has delivered over $1 billion in loans to 19,000 small businesses.

Disclosed in a prospectus filed with the Australia Securities and Investment Commission (ASIC), as it stands today, Prospa will raise $109.6 million at a price of $3.78/share. This would peg the market cap of Prospa at around $610 million.

The IPO is said to be fully underwritten by Joint Lead Managers Macquarie Capital and UBS and no offer of shares will be made available to the general public. Certain sophisticated investors may gain access to the IPO.

According to Prospa, funds raised will largely be used to fund the equity portion of the growing loan book, working capital, investment in new products and geographies and to repay corporate debt.

Prospa Chairman Gail Pemberton commented on behalf of the Board of Directors that she was pleased to offer the opportunity to become a shareholder in Australia’s # 1 online small business lender.

“Over the past few years, Prospa has strategically invested in people and technology and from the outset, Prospa recognised people would power its success and they have invested in building the right team and culture for the company to succeed. Prospa also designed its technology platform and workflow to be scalable, flexible and support its growth strategies.” “Prospa has always put the customer at the heart of everything it does. The strength of the customer experience is recognised with a Net Promoter Score in excess of 77 and 68% of existing customers eligible to take another facility with Prospa are doing so.”

Prospa said the IPO will see long term, London-based VC investor Entrée Capital, and Australian based venture capital investors Airtree and SquarePeg not selling any equity.

Entrée Capital, Greg Moshal and Beau Bertoli will be subject to escrow until the Company’s financial results for the year ended on 30 June 2020 have been released to the ASX.

All other escrowed shareholders, including Square Peg Capital and Airtree Ventures, will be subject to escrow until the reviewed financial accounts of Prospa for the half year ended on 31 December 2019 have been released to the ASX.

AustralianSuper Senior Portfolio Manager Shaun Manuell said they are excited to extend their support of the country’s largest Fintech lender to SMEs.

“As a long term investor and supporter of Australian business we look forward to participating in the growth of Prospa as it plays an increasingly important role in servicing a crucial segment of the economy.”

Prospa states that the small business lending market in Australia holds great opportunity. Similar to other countries, small businesses are a major contributor to the economy, with 2.3 million small businesses in Australia employing 44% of Australia’s private sector workforce and generating 35% of Australia’s GDP.

Prospa states that these small businesses have been underserved by the traditional banking system, providing an opportunity for Prospa. Small businesses are defined as having fewer than 20 employees.

Prospa created the first asset-backed warehouse securitisation for small business loans in the Australian Market, and has further diversified its sources of funding to include Warehouse Facilities, Term Facilities, Corporate Debt, and Cash to support its loan book and operations.

Prospa has expanded into New Zealand where it has financed NZ $12.5 million in originations as of March 31, 2019.

Prospa co CEO Greg Moshal explained that they started Prospa in 2012 because it was clear there needed to be a better way for small businesses to access capital.

“As small business owners, we’d experienced the frustration of missing opportunities because we couldn’t access finance. We found the traditional system slow, cumbersome and disheartening. From the very beginning, Prospa has set out to be the market leader at what we do – lending to small businesses.”

Moshal added that their company’s success was due to a united mission of serving small business:

“We’ll continue to invest heavily in our people and award- winning culture, creating world-class career opportunities as the business grows.”

Beau Bertoli, Prospa’s other co CEO, said the financial services industry is changing rapidly and via their new services they will be able to reach even more small businesses.

In a letter to shareholders, Prospa’s co CEOs touted the economic contribution Prospa has facilitated:

“..the contribution of Prospa’s lending to nominal Australian GDP since 2013 is now estimated to be more than $4 billion, and even more incredible is the 57,000 more jobs for tradies, hospitality workers, hairdressers, seahorse farmers and accountants that have been maintained across every State and Territory. The results are greater than we ever imagined and give us an immense sense of pride in the role of Prospa in the Australian economy.”

The two founders added:

“As a public company, our guiding principles won’t change. We’ll continue to strive to exceed our customers’ expectations and deliver for all stakeholders. We aim to build a company that creates value over decades, not just years.”

As Good as it Gets: OurCrowd Investors Benefit from Two IPOs in Just One Week as Uber & Beyond Meat Go Public

What do Goldman Sachs, Morgan Stanley, ‘Jay Z’, Jeff Bezos, Softbank, Tencent, Axel Springer, and OurCrowd all have in common? They all invested in Uber before it went public today (May 10, 2019).

Where OurCrowd stands out from the pack is the fact that OurCrowd enables smaller investors to participate in the growth of private companies prior to an initial public offering (IPO). Uniquely, OurCrowd provides access to promising young firms via their crowdfunding platform that, otherwise, these retail (accredited) investors would never stand a chance to invest in.

Incredibly, this is not the only high profile IPO that an OurCrowd portfolio company completed in the past week. Beyond Meat (NASDAQ:BYND) went public last Friday at $25 a share. Immediately, the share price popped higher and, as of today, trades at around $64 a share. Beyond Meat’s market cap stands at over $3.7 billion.

Uber (NYSE:UBER), the most anticipated IPO this year and the largest tech offering since Alibaba, went public at $45 a share and a market value of over $80 billion. Uber is one of the ten largest IPOs of all time. If you had been fortunate enough to have invested in UBER’s seed round, a $10,000 check would now be worth tens of millions of dollars.

Granted, market conditions when Uber went public were quite a bit different than the week prior, but regardless as to where the price lands, pre-IPO investors are the ones that scored big in this offer.

OurCrowd was a later stage investor in Beyond Meat participating in a funding round the year prior to the IPO. OurCrowd decided to back the company after founder and CEO Jon Medved did a taste test during a family cook-out that passed with flying colors. At OurCrowd’s Annual Investor Summit in March, Beyond Meat burgers were served to the thousands of attendees.

Shares in Uber came in a roundabout manner. OurCrowd was an early investor in JUMP, during their Series A round, which was acquired by Uber in April 2018.

After their first investment, OurCrowd tripled their position.

JUMP is an electric, dockless bike-sharing service that compliments the Uber service. Rumors have pegged the acquisition price of JUMP at around $200 million.

OurCrowd, launched in 2013, was conceptualized as providing access to smaller investors to VC level investment opportunities at a global level. While based in Israel, a hot startup marketplace and home to many of OurCrowd’s portfolio companies, OurCrowd seeks out promising young companies regardless of geography.

It is typical for OurCrowd investors to be participating alongside famous UHNW individuals or global VCs. The platform itself takes a stake in each offering thus it has skin in the game and interests are aligned.

At OurCrowd’s Annual Investor Summit, Medved announced that over $1 billion has been committed via the platform. More than 30,000 accredited investors have participated in the offerings which typically hold a minimum ticket of just $10,000. OurCrowd offers single company investments as well as a growing number of diversified sector funds.

Earlier this week, Crowdfund Insider had a chance to catch up with Medved in between flights. Medved was ecstatic at the turn of events as two high profile IPOs in a week is not exactly something that you plan.

Early stage investing is a pursuit that takes patience. Investors expect to park their funds for years before an exit opportunity such as an acquisition or public offering. Medved said that today, there are five Unicorns in the OurCrowd portfolio. Besides Uber and Beyond Meat, OurCrowd holds shares in the Insurtech Lemonade, Casper, and Klook.

Rumors indicate that there may be a few more OurCrowd portfolio companies pursuing an IPO in the coming months.


Medved said they are not just smart investors, they are value-added investors.

“We are very active in following on. We are playing with the big boys now. This is not about a trade. This is about building companies,” he said.

Medved said once they invest, they help the company to succeed. Using JUMP as an example, OurCrowd introduced them to a board member who became their CFO – a key member of their team. OurCrowd mobilizes their “crowd” to help companies grow.

Medved said the best deals get to pick who they want to invest in their company.

“The only way you can compete is not by paying more it is how you explain how you add value to the company after the investment.”

Deal flow is off the charts, said Medved. Success begets success.

Regarding Uber and Beyond Meat, Medved could not provide specific returns but he was clearly pleased. He said that between the two companies over one hundred investors participated

“…people are happy. we are working our butts off,” Medved shared.

Medved would like to provide even more access to a wider audience. While recognizing the shortcomings in current rules that limit individual participation in private offerings, Medved notes that currently, they are only tapping a small percentage of the 14 to 15 million accredited investors in the US.

“If we can reach 2% of that [accredited] market, we can grow our customer base by 10x.”

Having two big IPOs under their belt should help OurCrowd hit that target.

Unicorn Beyond Meat IPO’ed Raising $240 Million But OurCrowd Investors Had Chance to Invest Before NASDAQ Listing

Beyond Meat Inc. (NASDAQ:BYND), completed an initial public offering (IPO) last week raising approximately $240 million on a valuation of $1.5 billion at $25/share. Once listed on NASDAQ, Beyond Meat jumped far beyond its initial pricing quickly rising in value topping $3.8 billion at over $66/share.

The IPO represented a solid success for early investors that backed the young meat substitute firm. Typically, access to promising early-stage companies like Beyond Meat is reserved for big-name VCs and UHNW individuals but in this case, it was different. Investors registered on leading global crowdfunding platform OurCrowd had a shot at joining in on the successful firm prior to the public offering.

Speaking to Bloomberg on Friday, OurCrowd founder and CEO Jon Medved had this to say:

“As an investor, I am so happy. What makes this different is we are not just a traditional venture fund, at OurCrowd we actually allow individuals to get in and you had, like a dentist from Peoria putting in [$10,000] getting in on the pre-IPO private round .. of Beyond Meat together with people like Bill Gates. And that’s democratic and something to celebrate as well.”

OurCrowd invested in Beyond Meat around six months ago and still holds the shares. Every deal listed on the OurCrowd platform includes money from OurCrowd so interests are aligned with outside investors. Medved says they are “ecstatic” with the company and it is easy to understand why.

Ethan Brown, founder and CEO of Beyond Meat, claims to be the first plant-based food company to ever list on NASDAQ.

“We have always been a consumer-driven brand and we are excited to invite the brand’s longtime fans and supporters to join in on our vision for the Future of Protein. Our goal is for people everywhere to have access to the health and environmental benefits of our delicious plant-based meats,” said Brown.

Like other IPOs, many early investors are bound to a lock-up period. While it is not clear as to the long term intent of OurCrowd and the shares in Beyond Meat, Medved has high hopes for the firm.

A Whopper of an IPO

Currently, Beyond Meat and its Beyond Burger product is sold at Whole Foods, Kroger, Publix, and other outlets and restaurant chains. After a successful test run in St. Louis, fast food staple Burger King will be introducing the imitation meat in the “Impossible Whopper” nationwide.

Last Friday, the meatless burgers were promoted in a “Beyond Day” with discounted deals at Carls, Jr, Epic Burger, DelTaco and more. Burgerless burgers appear to be a retail hit and the share price may be reflecting this emerging sentiment.

Medved said he and his family personally sampled the meet before he invested in the firm. The taste test sealed the deal so to speak.

Medved says Beyond Meat may soon expand beyond burgers and move into steak and bacon as the company grows the range of plant-based products

Medved explains that OurCrowd now makes it possible for smaller (accredited) investors to not just read about billionaires getting richer but now they can participate alongside these high profile investors and make money too.

“And that is what is really missing from the marketplace,” says Medved. “With all of this enthusiasm with IPOs, which is certainly well placed with companies like Beyond [Meat] and Uber, the problem is that most of the people making the most money is a very small circle … and those are the guys that really make the bucks. And the rest of the people get to join at the IPO. What we are doing at OurCrowd is essentially trying to get them access to these deals as early as possible … before they go public.”

Thus, small investors get to join in on the significant wealth creation when the real money is made.

[easy-tweet tweet=”.@OurCrowd is a #crowdfunding platform where smaller investors get to join in on the significant wealth creation when the real money is made” template=”light”]

The success of Beyond Meat is a testament to OurCrowd’s ability to source very high-quality private deals. This track record has made OurCrowd the largest crowdfunding platform in the world garnering over $1 billion in commitments. Due to a flaw in existing US law, OurCrowd is not available to retail investors but Medved may have tipped his hat when he said not “yet.”

Medved said they are looking forward to the next looming IPO for a portfolio company. A small company by the name of UBER – a company in which OurCrowd holds a “fairly good stake.”

[easy-tweet tweet=”.@OurCrowd is looking forward to the next looming IPO for a portfolio company. A small company by the name of UBER – a company in which OurCrowd holds a fairly good stake” template=”light”]

Bitmain’s Hong Kong IPO Application Lapses

An IPO application submitted by Bitmain to the Hong Kong Stock Exchange in September has lapsed.

Bitmain is the world’s largest crypto-mining consortium. The company operates numerous crypto mining and research facilities across the globe and also designs and manufactures some of the industry’s most powerful equipment.

Bitmain products include its “AntMiner” mining machine series.

AntMiners contain specialized chips designed to efficiently process the algorithms used to secure various cryptocurrency chains.

The company came to prominence shortly after it was formed in 2013 and has regularly been accused of seeking a monopoly and of pursuing anti-competitive practices.

Bitmain’s IPO was criticized from the outset by various pundits, who accused the company of trying to dump the overly mature company on Main Street investors via a late-stage IPO.

Hong Kong regulators also reportedly expressed concerns that Bitmain had failed to demonstrate claims it was successfully rebranding operations to move more into AI and data-processing sectors.

Crypto bear markets of 2018 may also have spooked HK regulators, who reportedly expressed fears the company might not be able to maintain previous business levels as cryptomining contracts overall.

Bitmain announced the IPO lapse in a blog post and called on the public, the media, and regulators to better support the sector:

Bitmain’s listing application to HKex in September 2018 has reached its 6-month expiration date. We do recognize that despite the huge potential of the cryptocurrency and blockchain industry, it remains a relatively young industry which is proving its value. We hope regulatory authorities, media, and the general public can be more inclusive to this young industry. We will restart the listing application work at an appropriate time in the future.”

Skepticism about the crypto sector persists regardless.

For example, University of California computer technology researcher and lecturer Nicholas Weaver recently told journalists hosting Bloomberg’s “Odd Lots” podcast that Bitcoin’s only proven use case, 10 years in, is for “censorship-resistant,” ie. criminal payments.

Hong Kong Stock Exchange Head Suggests Bitmain Business Model Unsustainable, IPO Unlikely

The rumoured appointment of a new CEO at cryptomining giant Bitmain does not appear to have enhanced the company’s prospects of going public in Hong Kong, South China Morning News reports.

Responding generally to media questions about cryptomining firms seeking IPOs in Hong Kong, Charles Li, CEO of the Stock Exchange of Hong Kong (SEHK) suggested yesterday at the World Economic Forum in Davos that cryptomining companies in their current iterations may not be sustainable, and have not yet reliably realized pivots into other sectors:

“If a company made billions of US dollars through Business A, but suddenly said it will do Business B without showing any performance, or said Business B is better, then I don’t think the Business A featured in their application will be sustainable.”

Li also suggested that cryptomining firm’s substantial early profits resulted in part from low regulation in the sector, which is now diminishing:

“Besides, if regulators were hands off [on Business A] in the past but will regulate it in the future, will you be able to continue the business and still make money from it?”

Li added companies have the right to appeal and stated that the SEHK ensures that IPO applicants receive “procedural justice.”

Besides Bitmain, two other large China-based cryptomining companies, Ebang and Canaan, also applied to IPO in Hong Kong in 2018, and all three companies reportedly intend to pivot their business models away from cryptomining and towards artificial intelligence.

It also appears that all three companies have a limited track record in the AI sphere.

According to the SCMP, Bitmain, which boasts 75% market share dominance over the manufacture of cryptocurrency miners globally, claimed in its IPO to be a “strong contender in the AI chip industry.”

Though Bitmain reportedly, “launched a slew of AI products from machine learning chips to facial recognition servers,” last year, the company also closed its Isreali AI research facility in a round of crypto bear market belt-tightening a mere six month after opening the facility.

Bitmain also reportedly wrote in its IPO prospectus that 94% of revenues in the first half of 2018 came from the sale of cryptomining hardware. This is somewhat surprising given that the company has been vilified among crypto aficionados for veering close to monopoly status over the actual mining of bitcoins via the company’s substantial mining pools.

Signs suggest that Bitmain co-founder Jihan Wu may have lost millions by backing a contentious “fork” (code copy) of Bitcoin called “Bitcoin Cash.”

For the first six months or so after Bitcoin Cash was created, its price on exchanges tracked Bitcoin’s at around 10% and peaked at 20% when Bitcoin achieved an all-time-high price of $20 000 USD briefly in December 2018.

Currently, Bitcoins trades for around $3500 USD, and Bitcoin Cash trades for $130 (~4%).

Hong Kong regulators may also have had concerns about the fact that Bitmain reportedly wrote in the IPO prospectus that its holdings of cryptocurrencies account for 28% of the company’s total assets ($890 million USD).

By now, crypto markets are well-known for their general volatility and increasingly known for instances of insider trading and securities fraud.

As well, many crypto projects have failed to deliver viable products and are almost exclusively funded by their tokens, meaning they are faltering under lengthy bear market conditions.

Denied an IPO in Hong Kong, Cryptominer Manufacturer Canaan Considering New York Listing

Canaan, the second biggest maker of cryptocurrency mining hardware after Bitmain, may be bringing its bid to go public to a New York exchange after being rejected in Hong Kong, Bloomberg reports.

The company may be seeking to sell shares on a US exchange in order to raise $1 billion from investors by the end of Q2, a source claims.

Canaan, Bitmain, and a smaller Chinese cryptominer manufacturer called Ebang have all applied for IPOs in Hong Kong this year.

Canaan and Ebang’s IPO have lapsed as Hong Kong officials are reportedly concerned that crypto markets are unstable and immature.

Crypto prices have dropped 80% this year and news of insider trading and hacks arrives almost daily.

Many mining operations have lately closed their doors or temporarily shut down as the cost of mining coins exceeds the prices miners can get for them in open markets.

Investors should be very cautious about investing in cryptomining at this point because rumours that the industry has peaked are common.

Many projects, including Ethereum (off of which most other cryptos are “forked”/copied), are seeking to go to a non-mining protocol called “proof-of-stake” in order to bring down mining costs and become more environmentally-friendly.

If that happens, remaining miners will have to jump onto other networks and competition will go up substantially.

Ethereum has promised to change its settlement protocol for some time, and frankly, it may not happen.

Many critics say that mining is so far the only way to secure truly “decentralized” (globally-scattered and autonomous) networks.

That said, while 2017 was wildly profitable for many mining firms, 2018 has been under such a pall that a year like 2017 may not soon repeat.

Bitmain has often been accused of unfair practices and of seeking a monopoly in mining, claims that contribute to some cynical regard for the company’s IPO, which has been characterized by Bitcoin programmer Jimmy Song as an attempt to dump the overripe company on the public.

Canaan, which was established in Beijing in 2013, sells Avalon cryptocurrency miners.

The company reported $191 million in revenue in 2017, but it is unlikely the numbers were that good in 2018.

Canaan’s Hong Kong IPO filing shows Morgan Stanley, Deutsche Bank AG, Credit Suisse Group AG and CMB International Capital Ltd. as joint sponsors of the proposed listing.

Initial Coin Offerings: I Have to File a Form 10? Great! What’s a Form 10?

Those who have read the SEC settlements with AirFox (CarrierEQ.Inc.) and Paragon Coin, Inc. published on November 16, 2018, will note that the defendant ICO issuers agreed, among other things, to register their “coins” under the Exchange Act (the Securities Exchange Act of 1934) by filing a Form 10. Sounds easy, but what exactly is a Form 10?

Form 10 is the registration method a non-public company must use if it wants to list its outstanding securities on U.S. stock exchange without conducting an initial public offering (IPO). It’s also the form a company must use when its stock has too many record holders for it to remain private. And it’s also the form a company uses to voluntarily register under the Exchange Act.

For security token issuers, Form 10 is not just a possible SEC-imposed remedy for a blown offering, but may be part of a future liquidity strategy.

Here’s a brief run-down of what a Form 10 filing is and isn’t.

Form 10 requires comprehensive issuer disclosure, like an IPO prospectus. Form 10 requires virtually the same information an issuer must provide when it conducts an IPO, including audited financial statements, MD&A and risk factors. It is not a “fill in the blanks” form, but usually results in a narrative document that looks like a prospectus or a public company’s annual report on Form 10-K.

Form 10 registers a class of securities, not a transaction. Unlike registration under the Securities Act (the Securities Act of 1933), which registers the sale of securities in a specific offering, Exchange Act registration covers an entire class of securities but does not authorize a public offering.

Form 10 may be part of a liquidity strategy after a Security Token Offering (STO). Many issuers of security tokens are conducting STOs as limited offerings under Regulation D, with a plan to sponsor future trading of the security tokens on an alternate trading system (ATS) or an exchange after the holding period for restricted securities expires.

These issuers should anticipate that trading and fractionalizing of security tokens will result in their having more than 500 unaccredited record holders (or more than 2000 total record holders).

A Form 10 filing will be required after that threshold is crossed if the security tokens are deemed “equity securities” and the issuer has more than $10 million in total assets.

Note that if the SEC begins to allow companies to offer security tokens in a Regulation A offering, the Regulation A purchasers wouldn’t count toward the threshold for Exchange Act registration until the issuer has more than $75 million total assets. For purposes of Exchange Act registration requirements, “equity securities” include not just common and preferred stock and derivatives, but also interests in any “profit-sharing agreement,” a type of interest that many companies are considering issuing as security tokens.

More broadly, any issuer that is relying on an exemption from registration to issue security tokens now, but wishes to place the outstanding tokens on an exchange like Nasdaq or NYSE in the future without an IPO, would file Form 10 as part of the listing process.

In fact, some companies have conducted a so-called “Form 10 IPO” by issuing securities privately but committing to file a Form 10 and list the securities on an exchange or ATS by the time the restricted securities holding period expires.

Form 10 does not necessarily make your company “publicly traded.” Securities listed on a U.S. stock exchange must be registered under the Exchange Act, but that’s just one of the requirements. To be on an exchange, or even the OTC markets, securities must also be approved by FINRA (the Financial Industry Regulatory Authority) and qualify under the rules of the exchange, which will cover things like public float and financial condition.

Form 10 does not make your company’s restricted securities freely tradable. Like other securities, security tokens are “restricted securities” if they have been offered and sold by any method other than a public offering. Because Form 10 has no effect on the method of offering, it does not make restricted security tokens freely tradable. However, 90 days after Exchange Act registration becomes effective, the holding period for the registrant’s restricted securities drops from one year to six months. So, depending on timing, a holder of restricted security tokens could get some benefit in liquidity from Exchange Act registration on Form 10.

The SEC staff reviews Form 10, but it becomes effective in 60 days irrespective of review. The SEC generally reviews Form 10 registration statements and will comment on deficiencies. But unlike a Securities Act registration statement, which must pass SEC review before becoming effective, Form 10 becomes effective automatically in 60 days, whether or not SEC review is pending or complete. However, the SEC staff can notify the registrant of deficiencies at any time, even after effectiveness, and require remedial actions. Serious deficiencies can result in an order to stop trading or other sanctions.

After a Form 10 becomes effective, the registrant must file periodic reports under the Exchange Act. By filing Form 10, your company is signing up for full Exchange Act reporting: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. These include audited annual financial statements and quarterly financial statements reviewed by an auditor. The Form 10 registrant will also be subject to the beneficial ownership and short-swing profit reporting requirements of Sections 13 and 16 of the Exchange Act, as well as the proxy rules, if the registered securities vote. The company generally can’t stop filing reports unless it’s no longer traded on an exchange and has fewer than 300 record holders.

Form 10 is not used in an IPO or Tier 2 Regulation A offering. A company that completes a Securities-Act-registered IPO must also register its securities under the Exchange Act, but the process is greatly simplified. Because the disclosure required by Form 10 already appears in the IPO registration statement, the SEC permits the issuer to register under the Exchange Act using a very brief form, Form 8-A.

Similarly, a company seeking Exchange Act registration for securities sold in a Regulation A Tier Two offering may use Form 8-A because the company will have already provided detailed disclosure in a Regulation A offering statement reviewed and qualified by the SEC.

Form 10 should be prepared in consultation with securities counsel. Because Form 10 can become effective without SEC staff review, submitting a form that does not reflect a conscientious effort to provide complete and compliant disclosure to investors will likely provoke a harsh response.

Investment bankers and other financial service providers will also easily distinguish professional and non-professional work product. Accordingly, in making its debut as a reporting company, the registrant should rely on experienced securities counsel to ensure that its Form 10 satisfies the expectations of regulators and the financial industry while communicating essential information to investors.


Charles Kaufman is a shareholder of Homeier Law PC, a Los Angeles-based transactional law firm focused on both traditional and alternative corporation finance, including crowdfunding, security token offerings (STOs) and other financing based on digital assets, VC and other early-stage financings, and capital raising under the EB-5 immigrant investor program. Mr. Kaufman is especially known for his insistence that offering documents go beyond a rote exercise in compliance to tell a compelling story to investors and make even complex financial instruments comprehensible.

Jor Law is a pioneer in building out the ecosystem for digitizing and trading securities on the blockchain and other distributed ledger technologies. A finance and securities attorney, he is best known for his expertise in secured lending and alternative finance, including EB-5, venture capital, crowdfunding, and initial coin offerings (ICOs) or security token offerings (STOs). Mr. Law co-founded VerifyInvestor.com, the dominant accredited investor verification service in the world, and is an expert on attracting and verifying accredited investors. Within the crypto space, he’s most passionate about securities regulations affecting tokens, identity for regulatory purposes versus privacy and anonymity, and cross-ledger or cross-chain technologies. He is a consultant to Homeier Law PC.