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Regulation Crowdfunding (Reg CF) ​

Regulation Crowdfunding (Reg CF) is an exemption designed to allow startups and early-stage companies to raise capital from a large number of individuals online. All Reg CF transactions must be conducted through an SEC-registered intermediary, which can be either a funding portal or a broker-dealer.

Fundraising Limits ​

An issuer is permitted to raise a maximum aggregate amount of $5 million through all of its Regulation Crowdfunding offerings in a 12-month period.

Solicitation Rules ​

Issuers may publicly advertise their offering, but they are restricted to directing potential investors to the intermediary's platform where the offering is being conducted. The advertisement itself is limited to basic information, such as the issuer's name, the terms of the offering, and a brief description of the business. All substantive communications and transactions must take place on the intermediary's platform.

Investor Qualifications & Limits ​

Offerings under Reg CF are open to all investors, both accredited and non-accredited. However, all investors are subject to investment limits over a rolling 12-month period across all Reg CF offerings.

The investment limit for an individual is calculated as follows:

  • If either annual income or net worth is less than $124,000, the limit is the greater of $2,500 or 5% of the lesser of their annual income or net worth.
  • If both annual income and net worth are equal to or more than $124,000, the limit is 10% of the lesser of their annual income or net worth (not to exceed $124,000).

Disclosure & Reporting Requirements ​

Issuers must file an Offering Statement on Form C with the SEC prior to launching the offering. This form includes disclosures about the company, its management, the offering terms, use of proceeds, and financial statements that have been reviewed or audited depending on the offering amount.

After the offering, issuers are required to file an annual report on Form C-AR with the SEC and post it on their website until certain conditions are met.

Ongoing Updates & Communication ​

Issuers have a legal obligation to file a public annual report with the SEC (Form C-AR) until certain conditions are met.