If you were vacationing in late August, you might have missed a notable milestone in the young annals of crowd investing: the IPO of Chicken Soup for the Soul Entertainment, which raised $30 million in four weeks using Regulation A+.
Not only is it one of the best known brands and social enterprises to date to use the JOBS Act to raise capital, but the deal was also one of the largest, and was simultaneously listed on the NASDAQ Global market.
The company grew out of the best selling inspirational book series Chicken Soup for the Soul, which has sold over 100 million copies and spent four years on the New York Times best seller list. The book’s popularity spawned a multi-product company that has expanded into everything from pet food to multimedia entertainment.
Chicken Soup for the Soul Entertainment (CSSE) is the entertainment arm of parent company Chicken Soup for the Soul. It was launched in 2015 to run positive TV, film and online video content, including shows like Project Dad, a reality TV series in which three celebrities balance their careers and fatherhood, and Hidden Heroes, a TV show for teens that highlights “everyday heroes” doing good deeds.
The Cos Cob, Conn.-based CSSE conducted its IPO through Regulation A, the “mini IPO” provision of the JOBS Act that was enacted in June 2015. Reg A+, as it’s more informally known, allows companies to raise up to $50 million without all of the red tape and expense of a traditional IPO.
“I don’t think we would have done this without the JOBS Act,” says Bill Rouhana, Chicken Soup for the Soul CEO. Rouhana bought the company in 2008 and has overseen its expansion into new product categories.
The big advantage to taking the Reg A+ route, says Rouhana, was being able to avoid going through a quiet period as traditional IPOs require. That allowed the company to tap its sizable 2.8 million social media following and make the most of its significant brand recognition. “Reg A+ allows you to tell your story,” he adds. “And that allowed us to be noticed.”
Feeling “Chicken Soupy”
The company, whose mission is to “share happiness, inspiration and wellness through everything we do,” set aside 900,000 shares for individual investors. Another 1.6 million shares were sold to traditional IPO investors and institutions by a broker-dealer network that promoted the offering.
“We were able to level the playing field for investors,” says Rouhana. Doing otherwise, he says, “didn’t seem very Chicken Soupy.”
Rouhana hopes that other social enterprises will be able to benefit from his company’s experience. For example, putting together the prospectus was quite a task, he says, but the final product can serve as a template for more companies.
CSSE sold 2.5 million shares for $12 each. (The shares were trading around $9 on Sept. 5) The $30 million it raised, and the roughly $150 million valuation that implies, is a sizable amount of money considering that revenues were $8.1 million in 2016 (up from $1.5 million in 2015). The company is profitable, however, and qualifying to be listed on the NASDAQ Global market added another level of vetting.
It also didn’t hurt that actor Ashton Kutcher is a partner and investor. CSSE programs will be distributed on Kutcher’s A Plus media company (parent company Chicken Soup for the Soul bought a majority stake in A Plus last year).
This is one to keep an eye on.
Anne Field is a New York-based journalist who writes about social enterprise and impact investing. A version of this article originally appeared on her Not Only For Profit blog on Forbes.com.