🏛 Understanding Regulations for Crowdfunding
Crowdfunding is a powerful way for companies to raise capital from individual investors — but it’s also a highly regulated space. To protect investors and promote transparency, the U.S. Securities and Exchange Commission (SEC) has established specific rules that companies must follow when offering investments online.
This guide explains the most common types of exemptions used in online capital raising: Regulation Crowdfunding (Reg CF), Regulation A (Reg A), and Regulation D (Reg D).
Each one has different rules about who can invest, how much can be raised, and what disclosures are required.
🔎 Regulation Crowdfunding (Reg CF)
Reg CF allows companies to raise money from the general public — including non-accredited investors — through a FINRA-registered funding portal or broker-dealer.
✅ What You Should Know:
Anyone can invest, subject to annual limits based on your income and net worth
Companies can raise up to $5 million per year
All investments must go through a registered platform
Companies must disclose financial statements and key business information
Securities under Reg CF are illiquid and generally cannot be resold for one year
Learn more:
🔗 SEC Reg CF Overview
🔎 Regulation A (Reg A)
Reg A is often called a “mini-IPO” and allows companies to raise larger amounts of money from the public, with more relaxed rules than a full public offering.
There are two tiers:
Tier 1: Raise up to $20 million
Tier 2: Raise up to $75 million, with additional reporting and audit requirements
✅ What You Should Know:
Available to all investors, including non-accredited individuals
Tier 2 allows for preemption of state securities laws, making it easier to raise nationally
Requires companies to file an offering circular with the SEC
May include ongoing reporting obligations after the raise
Learn more:
🔗 SEC Reg A Overview
🔎 Regulation D (Reg D)
Reg D is used for private offerings and is the most common exemption for raising capital from accredited investors.
There are two important versions of Reg D used in online crowdfunding:
🔒 Reg D 506(b)
Companies can raise unlimited capital
Allows up to 35 non-accredited investors, but they must be “sophisticated” (able to evaluate risks)
Cannot use general solicitation or advertising — offerings are typically private
No third-party verification required for investor status
📌 Most suitable for friends-and-family rounds or limited private placements
🔓 Reg D 506(c)
Companies can raise unlimited capital
Only accredited investors may participate
Allows for general solicitation and public advertising (social media, email campaigns, public pages)
Investors must go through strict verification (proof of income, assets, or professional certification)
📌 Common in online crowdfunding campaigns that market publicly
DealMaker supports 506(c) offerings that integrate accredited verification into the investment process
Learn more:
🔗 SEC Rule 506 of Reg D
🔗 SEC Accredited Investor Definition
⚠️ Why This Matters for You
Each regulation affects:
Who can invest
What you’ll need to verify or submit
Whether the company can publicly market the offering
How (and if) you can resell your securities later
Before investing, always review the offering’s disclosures and legal documents. You’ll usually find the regulation listed in the offering summary or subscription agreement.
📬 Have Questions?
Check your investor dashboard for the regulation listed on each offering
Read the full SEC pages linked above for detailed breakdowns
Contact DealMaker Support or the issuer’s investor relations contact for offering-specific questions