Sagoon plans to raise $20 million through mini IPO

Published On: December 18, 2016 05:57 PM NPT By: Republica | @RepublicaNepal

KATHMANDU, Dec 18: Sagoon Inc., a US-based social commerce startup founded by a Nepali, will soon be launching a Public Offering (Mini IPO) under the regulations enacted by the Obama administration's landmark JOBS Act to establish itself as a public company.

Through this 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. An investor can invest as little as $299 which is around 30 thousand Nepali rupees. 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.

Sagoon is waiting to get qualified by the US Securities and Exchange Commission (SEC) to start accepting online investment globally from the general public in mid-January 2017. This social media startup plans to sell 8,69,565 shares worth $20 million.

Apart from being the first Nepali-founded company to come out with the public offering, Sagoon is the first social media venture in the world that offers an investment opportunity to the public in its early stages. This 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, first time in the history, allows the general public to invest in a very early stage companies. 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 a full IPO companies, like Facebook, which already had more than billions of dollars valuation, meaning you weren’t going to get rich from buying its public stock.

Under this new law, U.S. and Canadian companies that have their primary offices located in the United States can raise up to $50 million annually. This 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. That’s not the end, after getting qualified, a startup is required to file the financial discloser publicly 2 times in a year. In this regard, the new law is similar to traditional IPO offering (which Facebook and Google followed) 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 & love to build innovative products and take a risk to invest in our dream. I want them first to receive potential financial returns,” said Govinda Giri, the founder of Sagoon.