Sunday, December 18, 2016

Sagoon plans to raise $20 million through mini IPO

Sagoon Inc –a US-based social commerce startup founded by a Nepali – is soon launching a Mini Public Offering (mini IPO) under the regulations enacted by the Obama administration's landmark JOBS Act to establish itself as a public company.
Through the mini IPO, the company plans to raise $20 million from the general public globally and use that money to launch mobile apps, introduce Social Smart Card and increase the user base, according to the founder of Sagoon Govinda Giri.
An investor can invest as little as $299 which is around Rs 30,000. The shares will be allocated to the investors based on their availability and first come first basis. Those, who are interested can purchase as many shares as they want. Each unit of a share costs $23, the company informed.
Sagoon is waiting to get qualified by the US Securities and Exchange Commission (SEC) to start accepting online investment globally from the general public. If everything goes as plan, the mini IPO will be floated in mid-January 2017. The social media startup plans to sell 8,69,565 shares worth $20 million, Giri informed.
Apart from being the first Nepali-founded company to come out with the public offering, Sagoon is also the first social media venture in the world that offers an investment opportunity to the public in its early stages. The opportunity was not available during the early stages of other social media like Facebook and Twitter.
The US JOBS Act – which was signed into law in 2012 – is regarded as one of US President Barack Obama's most ambitious legislations that, for the first time in the history, allows the general public to invest in a very early stage companies.
Earlier, only rich people, who either had an income of more than $200,000 a year or have the net worth in excess of $1 million, and bankers were allowed to invest. And the public had to wait for the companies to float full IPO.
Under the new law, the US and Canadian companies that have their primary offices located in the US can raise up to $50 million annually. It is a great opportunity for young startups to go public in their early stages.
However, SEC regulation is a quite lengthy and expensive process; it takes around 4 months to prepare the filling documents, involves legal and accounting fees of over $100,000, requires 2 years audited financials and follows many regulations. After filling, SEC again takes a couple of months to review and approve. After getting qualified, a startup is required to file the financial discloser publicly twice a year. In this regard, the new law is similar to traditional IPO offering except the limit of raising funds is up to $50 million annually.  
“This is a great opportunity to bring people from my own community, fans and supporters who believe in our dream and love to build innovative products and take a risk to invest in our dream," Giri said, adding that he wants them first to receive potential financial returns.

No comments: