Boxabl is currently raising capital on two different investment crowdfunding platforms: StartEngine and Republic.
As was previously reported, Boxabl is aiming to raise up to $1.07 billion in a Reg D – Reg A+ funding round. The funding is divvied up with a $500 million Reg D equity sale, $500 million in debt, and $70 million in a Reg A+ offering that is available to non-accredited investors.
The Reg A+ offering is being pitched under the same terms on StartEngine and Republic at a $3 billion valuation. As it stands today, Boxabl has raised $15.2 million on StartEngine and $978,000 on Republic. In total, as of today, about 7000 investors have backed the Reg A+ offering so far. Boxabl has previously raised $55 million in crowdfunded offerings.
While the valuation may seem pricey for what is effectively a startup, Boxabl has garnered much popular attention, along with a good number of pre-orders, for its spin in pre-fabricated housing that counts Elon Musk as a customer. Additionally, the US government reportedly placed an order for 156 homes for over $9 million.
Boxabl reports that over 90,000 people have reserved a Casita – the first iteration of its modular housing product that will cost around $50,000. The capital raised will be utilized to fire up a factor to satisfy demand.
As outlined in the Boxabl offering circular, the company has enlisted Dalmore Group, LLC, a FINRA-regulated Broker-Dealer, to perform administrative and compliance-related functions in connection with the Boxabl offering. Dalmore is not acting as an underwriter nor placement agent but is acting as the managing broker for verification of certain aspects of the offering. Recently, CI connected with Etan Butler, Chairman of the Dalmore Group LLC, a firm that is widely engaged in the securities crowdfunding sector. We asked Butler why the Boxabl offering was doing so well. Butler said there were a number of factors, including the co-listing and a “pretty high profile celebrity” using one of their units, referencing Elon Musk owning a Boxabl unit (perhaps not living in it).
Butler said that as the broker-dealer of record, they provide the ability to facilitate and support co-listings on other marketplace platforms adding that the co-listing has worked well in this case.
“Also the power of influencer involvement is helpful, although not always easy to replicate,” stated Butler.
Butler added that, as exemplified with the Boxabl offering Dalmore provides similar services to other issuers:
“In addition to the compliance and regulatory role we play as BD of record, Dalmore consults with clients to help develop an optimal approach to their capital raising efforts, including introductions to multiple marketing/promotional service specialists who we’ve seen work well with other clients, PR firms, financial publications and newsletters and co-listing syndication opportunities. This requires significant coordination and compliance procedures, and something I believe sets Dalmore apart from others.”
Butler explained that many offering platforms charge per investor “tech” or “subscription” fees as high as $30-$40 per investor – a significant expense for high-volume offerings. This cost can add up with traditionally lower Reg A+ and Reg CF investment minimums alongside credit card payment processing as high as 4.5% or ACH fees as high as 2%.
“Dalmore’s approach is to keep costs low and to help position our issuers for success both through their own self hosted offering as well as across multiple platforms that can help drive new investors from their own investor bases, not on requiring the issuer to transact on our platform alone. Our platform, Dalmore Direct, has a zero per investor tech fee, 3.1% cc processing fee and 0.15% ACH fee – we treat these as pass throughs, not as a profit center and this can amount to hundreds of thousands/millions of dollars in savings in high volume offerings. You can do the math yourself, on a $50m raise, if 50% of the investment comes from ACH at .015% versus 2% and 50% through CC at 3.1% versus 4.5%, and $0 per investor versus $30, that amounts to significant savings that remain in the issuers pocket rather than the platforms. I believe this is another big reason we have been so active in the space.”
Butler said that the experience with the Boxabl Reg A+ also relates to Reg CF offerings that have a lower funding cap of $5 million (Reg A+ can raise up to $75 million). Butler noted that you cannot really co-list a Reg CF offering like you can with Reg A+ or Reg D, as a Reg CF offering must be on a single funding portal or broker-dealer.
The Boxabl offering has plenty of time to hit its funding goal on StartEngine/Republic as the securities sale is said to be available for months. Boxabl has expressed an interest in pursuing a franchising model as it plans to expand internationally at some point in the future.