Why is NewsBeat Social Doing a Reg A+ Mini IPO? Transparency & Participation are at the Top of the List

Newsbeat Social IPONewsBeat Social is a social news platform that has many unique users (around 59 million) but little in the way of revenue – yet. The company is now working with WR Hambrecht to raise growth capital by using updated rules under Title IV of the JOBS Act otherwise called Reg A+.  NewsBeat is hoping to raise up to $50 million – not a small amount. The process has been described as a “Mini-IPO” type offer that provides scaled disclosure for an early stage company that needs finance to grow.

NewsBeat is a good match for Reg A+ as the company may solicit their millions of users. Unlike Reg D, the most popular form of raising capital today, anyone may invest – not just the rich (IE accredited investors).

According to Geoff Campbell, President of digital news platform, there are multiple reasons why they decided to choose this path. First, in the comparison between traditional VCs vs. many smaller shareholders, NewsBeat will be able to keep greater control. No single large shareholder will be sitting at the board room table demanding a quick exit.  Campbell also is of the opinion that the process required of doing a public offer matches their mission as an independent news platform. According to a post in Medium, their core values won the debate;Geoff Campbell

“Thinking through the decision, we looked more closely at the core values of our business. As a next generation news agency, we embraced the fact that innovation would lie at the heart of what we do. But as a news company, we knew it would be transparency, fairness and accuracy that would help us build the kind of trust with our audiences that would allow us to thrive.

There’s a strong element of transparency in the IPO process, and in being a public company. For many companies, the idea of opening its books to the public and to regulators is a necessary if unpleasant dose of medicine-taking. But as an emerging news organization, it’s something we court. We need not only to communicate but also continuously demonstrate transparency to our audiences.”

NewsBeat has also stated their intent to list on NASDAQ soon after completion of this funding round – a step that may provide a fair amount of liquidity for early shareholders.

NewsBeat management is of the philosophy that their news audience isn’t just a passive lot peering up towards the ivory tower of news – their consumer will now be owners too, “active participants” in not just covering the news but in benefiting from a successful service.  I wonder if any traditional media companies ever pondered this approach? Probably not.


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