From: Andrew Weeraratne
As an entrepreneur who recently founded a company and took it public right away in order to raise money through public markets in a transparent manner, I would like to add my comments with reference to the recent filing by OTC Markets Petition for Rulemaking with the Security and Exchange Commission, aimed at convincing the SEC to expand Regulation A+ to allow SEC Reporting Companies to utilize this important form of online capital raising.
First let me give you my background: I arrived in this country to go to school and became a Certified Public Accountant and after getting my experience in business and finance I set-forth to begin my own business. I built a successful CPA practice where I employed 5 people. I had no capital to start my CPA practice and could not get any bank loans and thus borrowed money with credit cards at interest rates of about 18% to 24% and obviously that affected my earnings. In fact, after 12 years of practice, I had to sell my CPA practice to get rid of those credit card loans. To make the story brief, after I sold my CPA practice, I went on to launch various businesses employing and training many young people to launch professional careers (I sold most those businesses eventually and some of them are successful businesses still) with partners and each time I faced the problem of getting enough capital to properly operate and expand my business (often having to sell them to settle what I borrowed to found them).
Eventually I decided that the best way to begin a business is to begin it as a public company since that gives all investors transparency plus an exit through public markets if they have to cash out their investment due to an emergency while at the same time not needing me to depend on a few friends to borrow money from and then having to sell the business (as when it really begins to generate profits) to settle their debts. Then, as you can imagine, I further discovered the limitations small public companies face due to regulations and expenses of maintaining a public company. Also I discovered that many investment bankers don't help small start-ups like us to raise capital. These hurdles have put me in a quandary currently.
Thus I was overjoyed when I first heard of Regulation A+, but only until I found out that small publicly reporting companies are excluded from benefiting from Reg A+. I honestly cannot figure out the reason for this exclusion since this put the entrepreneurs like me almost no where to turn. First we cannot get easy access to most investment bankers since they don't want to deal with small start-ups and then we cannot use the Reg A+ that can be used by private companies who don't have the expenses we have to bear since they are not as transparent to the public as we are. Thus I am at a loss to understand the justification for this exclusion of reporting public companies from Reg A+. I feel this is totally unfair and totally discriminatory against a group who had chosen to do the right thing of providing transparency to investors in the most efficient manner regardless of the expense of doing so.
Thus when I heard that the OTC Market is making this petition I saw the need to emphasize my agreement with them and send my comments to the SEC directly. Please do not hesitate to contact me directly if you wish get more details of all the problems and hurdles small businessmen-entrepreneurs, such I, have to face when we try to set up innovative ventures that can create jobs in our society. I will be glad to take my time to talk to the SEC in order to give the commission my personal experiences that I believe could help many small business people constantly trying to set up businesses, especially in this market where it is hard to find a well-paying job. If the SEC opens up Reg A to small public companies like us you will be doing the entrepreneurs the most essential thing they badly need to be innovative, and that is providing access to capital under the scrutiny of the SEC.