Austin — Virtual reality startup Virtuix is gearing up for a “mini-IPO” by tapping into a new funding avenue made possible by the Securities and Exchange Commission’s Regulation A+.
“Since our early beginnings, we’ve had a strong community of backers and supporters that frequently asked us [if they can] buy shares in Virtuix,” says Jan Goetgeluk, Virtuix’s founder and CEO. “Now our community can participate in our financial future and invest alongside our Silicon Valley venture capitalists and institutional investors.”
The startup is hoping to raise $10 million to $15 million with the fundraise, which will begin March 23. (Though the use of Regulation A+ is called a “mini-IPO,” Virtuix will remain a private company, Goetgeluk says.)
Virtuix already has commitments from institutional investors such as the Singapore-based Scentan Ventures; Western Technology Investment in Portola Valley, CA; Tekton Ventures in San Francisco; and New York-based Scout Ventures. (Before this, Virtuix had raised more than $8 million from investors such as Dallas Mavericks owner and tech billionaire Mark Cuban.)
The startup is currently shipping devices in its 50-unit beta program, and has a backlog of nearly 5,000 units, Goetgeluk says. He adds that feedback from those early users has been positive and that he expects to ramp up general production next month.
Goetgeluk first told me about the idea in January as the company was preparing to attend the Consumer Electronics Show in Las Vegas. The startup was originally funded by enthusiasts in 2013 through a $1.1 million Kickstarter campaign. Virtuix makes the Omni treadmill, which, when paired with an Oculus Rift reality headset, enables players to control their characters’s movements by walking, jumping, running, and turning on a platform.
In June, The US Securities and Exchange Commission changed its decades-old Regulation A rule, which allowed private companies to seek funding of up to $5 million from wealthy individuals. Now companies can solicit money from unaccredited investors in two tiers of $20 million and $50 million.
Among the more high-profile companies choosing to go this route was Elio Motors, which earlier this year raised about $17 million. To do so, the startup automaker used StartEngine, a new crowdfunding site focused on Regulation A+ fundraising.
Jay Kalish, chief counsel at OurFund in Israel, says that Regulation A+ funding can be a handy tool for startups, especially those seeking funds in the $20 million to $50 million range. “You don’t have to comply with all the ‘blue-sky’ filings” as you would in a traditional IPO, he says. “That’s a pretty big advantage.”
