Stephen Brock and How Reg A+ Can Help Life Science Companies Raise up to $75 Million in Funding

·3-min read

Without a doubt, the COVID-19 crisis changed the consumer and capital markets with ramifications that will be felt for years to come. Small and medium-sized businesses will be most affected by this change, as they will require funding to adapt to the new economy.

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Although banks and financial institutions were once the go-to sources of funding, they have now tightened their lending standards, making it more difficult than ever for all but the largest organizations to obtain capital and support their businesses.

Fortunately, the Jumpstart Our Business Startup (JOBS) Act of 2015 made it easier and more flexible for small to mid-tier businesses to obtain funding. It expanded on the terms of Regulation A, now known as Regulation A+, or Reg A+, to allow companies to raise up to $75 million per year from both accredited and non-accredited ("Main Street") investors. This elevates it to the point where it can offer capital-intensive life sciences companies an attractive alternative to venture capital and private equity.

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Medical Funding Professionals, for example, recognize the tremendous potential Regulation A+ can provide to Biotech, MedTech, Pharma, and other Life Science founders and executives in managing their businesses and realizing higher value during the fundraising process.

Medical Funding Professionals is a consulting firm that helps medical innovators bring life-saving and life-changing technology to patients while maintaining control and ownership of their company. The company's Capital Planning Valuation Strategy™ provides a road map for managing future capital demands while protecting the interests of the founders, executives, and early investors.

Stephen Brock, a registered investment advisor with over 20 years of experience in securities and finance, founded and now runs the company.

Throughout his career, Mr. Brock has held various leadership positions in companies in the medical and life sciences sectors. His primary areas of expertise include, and are not limited to, Management Consulting, Strategic & Business Planning, and Finance. Brock is also a proponent of Reg A+, which he believes is a more appealing alternative to traditional private equity and venture finance.

“The democratization of capital is a tremendous boon for medical innovation,” says Brock. “It’s the ultimate impact investment, and the public wants an opportunity to support that, as well as to participate in the potential financial returns.”

But companies remain skeptical. “Unfortunately, they just don’t know any better,” Brock continues. “Banks and venture capital are the only things they’ve known for years, and they just don’t even realize there are other options.”

Brock points to examples including Emerald Health Pharmaceuticals (EHP), a pre-revenue biopharmaceutical company developing treatments for neurological and autoimmune disorders that successfully raised $60 million, and BiologX, a pharmaceutical company focusing on affordable insulin that is currently raising $50 million, both via Reg A+.

The federal government recently increased the limit on Reg A+ from $50 million to $75 million per year, with wide bilateral support. This is critical for medical innovation, where the median cost of a single clinical trial is nearly $20 million.

While Reg A+ is growing significantly—2021 filings surpassed 2020’s totals by mid-year—it’s still a drop in the bucket compared to VC deals, but Brock sees this as an opportunity.

“80% of the people I talk to have never heard of Reg A+,” says Brock. “And of those that have, only one or two have actually known anything about it. So it’s on us to educate them, and that’s what we do—show them exactly what it could do for their company.”

Brock is passionate about two things: first, making sure these innovative companies get access to the capital they need to get their products to patients, and second, making sure the founders, early employees, and early investors stay in both financial and governance control: “If we truly want to support innovation, let’s make sure the innovators see the just rewards for their efforts.”

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