In the latest Capital Ideas interview, Mark Elenowitz, Managing Director at Digital Offering, revealed the strategies behind the historic Newsmax IPO. This groundbreaking Regulation A+ offering achieved the largest two-day opening gain in US market history.
The success story provides a compelling blueprint for how modern IPOs can democratize capital markets while driving exceptional returns.
Reimagining the JOBS Act’s Potential
When the JOBS Act emerged in 2012, many industry participants viewed it primarily as a marketing vehicle rather than a transformative financial tool. Elenowitz, with his extensive background in investment banking dating back to 1990, recognized a different opportunity when others were focused on short-term gains.
“When we looked at the JOBS Act in 2013 and 14, I used to sit on panels and we were the only regulated firm and regulated individual that would sit on a panel made up primarily of marketers and other service providers who were giving investment information and advice to issuers that we found to be just not right,” Elenowitz recalled.
He continued, “The whole key and what the JOBS Act was supposed to be was creating economic development allowing entrepreneurs to be able to raise capital. My problem with it from the get-go was that these were investments that were going nowhere if you don’t have an exit strategy.”
This insight led Elenowitz to deliver a blunt assessment at industry events:
“Crowdfunding is nothing other than a charitable donation. You’re going to drink the beer, eat the bread, and at some point, you want your money back—and there’s no exit for it.”
With this fundamental problem identified, Elenowitz pioneered a new approach: using Reg A+ to revitalize the small-cap IPO by creating a clear path to national exchange listings.
Despite initial skepticism—even from the New York Stock Exchange (“Isn’t this for that flying car nonsense? We’re the New York Stock Exchange, we would never do this”)—he persisted and broke through with Myomo, the first Reg A+ to list on NYSE MKT.
The Newsmax Success Story
After that initial breakthrough, Elenowitz found that many competitors entered the Reg A+ space without the same disciplined approach.
“Some of my competitors got in and when you look at Reg A it’s important to have an investment bank that looks at it from a standpoint of great responsibility,” he explained. “Basically you can’t take an entrepreneur’s valuation and accept that as reasonable. It’s most of the time blue sky and irrational.”
These irresponsible practices led to a temporary retreat from the market, but Digital Offering returned with a refined approach and found in Newsmax (NYSE:NMAX) an ideal candidate.
The conservative media company boasted a passionate audience of approximately 40 million viewers—creating a natural investor community that perfectly aligned with Elenowitz’s vision of turning loyal customers into empowered shareholders.
Through a comprehensive capital formation strategy, Digital Offering raised a total of $300 million: $225 million in a private placement to accredited investors using Title II of the JOBS Act, followed by $75 million through a Reg A+ offering.
The IPO’s success was extraordinary.
The offering sold out in just four days, forcing Digital Offering to turn away eager investors after reaching the $75 million Reg A+ cap.
“We had to turn off the platform at $106 million and start not letting people in,” Elenowitz noted.
The team had to wait to list while navigating blue sky compliance requirements and facing a ticking clock on financial reporting deadlines.
When trading finally commenced on the NYSE, demand was unprecedented. Elenowitz was on the trading floor working with specialists to establish price discovery.
“I said we’ll open it at 14, and he says, you know, let’s take some wages where we’re going to close at the end of the day. I said I would be ecstatic if we closed at 14 to 16 in today’s market,” Elenowitz recalled. “When that closed at 80, we were shocked.”
Democratizing Capital Markets
A cornerstone of Digital Offering’s philosophy is leveling the playing field between retail and institutional investors. For the Newsmax private placement, minimum investments were set at an unusually low $5,000 instead of the customary $25,000-$100,000 thresholds.
“We tried to equalize it,” Elenowitz explained, noting they received pushback from people who didn’t understand accreditation requirements.
“We did get a lot of upset people where they didn’t understand what accreditation was. They said it’s not fair . . . why do the rich get richer, but what we did is we lowered the minimum to $5,000 on a private placement?”
This democratization philosophy continued with the public offering, which also featured accessible minimums.
“We democratize Wall Street and we’re bringing Main Street to Wall Street and finally letting the little guy get the same opportunity of structure that we normally leave only for the institutional client,” Elenowitz explained.
The approach extended to marketing strategy as well. Unlike traditional IPOs constrained by quiet periods, Reg A+ allows general solicitation—a perfect fit for today’s digital-first communication environment.
“The reality is we all use our cell phones, we all are constantly looking at this immediate gratification communication vehicle. How do you do an IPO when you go into a quiet period?” Elenowitz observed.
Newsmax leveraged its media platform to advertise the offering directly to viewers through split-screen promotions. Interested investors could scan QR codes leading to comprehensive landing pages with offering documents, FAQs, and detailed risk disclosures. Most significantly, investors could use credit cards to participate—a consumer-friendly innovation that simplified access and brought the subscription process into the digital age.
The Importance of Responsible Gatekeeping
Elenowitz attributes many Reg A+ failures to irresponsible market practices, particularly regarding valuation. Unlike some competitors who accept issuers’ inflated valuations, Digital Offering emphasizes disciplined analysis and responsibility.
“We say no more often than we ever say yes,” Elenowitz asserted. “Broker dealers and service providers and attorneys and everybody in the capital stack service provider arena need to say to these issuers, ‘You’re not worth $3 billion.'”
This gatekeeping extends to the investment structure. Digital Offering’s transactions feature straight common stock without the toxic warrant provisions and reset mechanisms that plague many small-cap offerings.
“The way we do our deals is straight common stock, no structure, none of these reset provisions, none of the toxicity that we see in the market,” he explained.
The Power of Community-Based Capital Formation
Newsmax’s success highlights a critical insight: companies with passionate customer bases or communities make ideal candidates for public offerings.
“We always say it’s consumer-hospitality-entertainment, anything that has a large social media following, a large customer base, a large affinity group, and a story that you can understand in 30 seconds,” Elenowitz noted.
This community-based approach creates a virtuous cycle. Customers become investors who advocate for the company, increasing both financial support and business growth. This diversified, retail-heavy investor base also provides stability during market turbulence when institutional investors might need to liquidate positions.
Regulatory Evolution and Future Challenges
While Digital Offering has created a winning formula for Reg A+ offerings, regulatory challenges remain. Elenowitz identifies several areas for potential improvement:
- Increasing the Reg A+ limit beyond $75 million, though he notes most companies don’t approach the current cap
- Concerns about secondary trading without proper gatekeeping
- The need to bifurcate marketing expenses from underwriting compensation in FINRA reviews
- Addressing problematic “direct listings” that bypass proper valuation discipline
The Future of Modern IPOs
Digital Offering’s success with Newsmax has attracted significant attention, with institutions now seeking allocations in upcoming deals. This represents a dramatic shift in perception about Reg A+ offerings, but Elenowitz remains focused on maintaining the integrity of the model.
“We’re being extremely careful about our next few deals,” he emphasized. “Sometimes people base it—they think that the banker that was involved are the ones that created this great return when the reality is the issuer and Newsmax and what his vision and what he was able to create and the revenue growth.”
Elenowitz is particularly interested in companies that qualify for NYSE listings, which typically attract larger banks that exclude retail investors.
“We’re being selective now on the next deals that we’re working on, trying to find and work with issuers that are similar in nature to Newsmax,” he said. “Most issuers that are going on to that are larger in nature with larger banks that these retail investors would never get access to.”
This commitment to retail-first offerings is generating significant industry interest.
“That first day, every institution I worked with over the last several years all called me asking for an allocation on the next deal and all wanting to do a follow-on offering,” he noted with satisfaction.
The Newsmax IPO represents more than just a financial success—it arrived during what Elenowitz called “probably the worst time for the markets ever,” when high-profile IPOs backed by major investment banks were being pulled.
The fact that Newsmax not only proceeded but thrived demonstrates how thoughtfully designed capital formation can serve both issuers and investors while fulfilling the JOBS Act’s original promise of democratized markets.
By combining modern marketing techniques with traditional investment banking discipline, Digital Offering is creating a model that could revitalize the small-cap IPO landscape and reestablish the connection between Main Street investors and growth companies. As Elenowitz puts it, they’re “making it so retail gets a chance before the institutions”—a revolutionary approach in today’s institutional-dominated markets.
Nick Morgan is President and Founder of ICAN, the Investor Choice Advocates Network, a nonprofit public interest litigation organization dedicated to serving as a legal advocate and voice for everyday investors and entrepreneurs. He was previously a partner in the Investigations and White Collar Defense Group at Paul Hastings law firm. Morgan previously served as Senior Trial Counsel in the SEC’s Division of Enforcement. Capital Ideas is a series created by Morgan and Dara Albright.
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