PiPEs Are Still the Financing Method of Choice for MicroCap Public Companies


According to a survey conducted by OTC Markets Group this year, 92% of respondents that raised capital last year say they used a private placement or private-investment-in-public-equity (PIPE) financing.

117 CEOs and CFOs of U.S. and international companies under $2 billion in market capitalization traded on the OTCQX and OTCQB markets responded to the survey.

Interestingly, nearly 6.5% of respondents say they plan to raise capital this year under the Jumpstart Our Business Startups Act (JOBS Act) Regulation A+, compared to only 1.6% of respondents who used that financing option in 2016, demonstrating the growing popularity of the new exempt offering type among smaller issuers.

The JOBS Act has expanded access to capital for small companies in online crowdfunding, however more still needs to be done to diversify the capital raising options available to smaller issuers,” said Jason Paltrowitz, Executive Vice President of Corporate Services at OTC Markets Group.  “Expanding Regulation A+ to include current reporting small companies would expand this attractive financing option to thousands more small, public companies that are already providing high-quality disclosure to the SEC.  In addition, Congress should remove the restrictions on allowing companies to sell their shares into the public markets so they can get the full benefit of their public listing.

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