Reg D vs Reg CF: Raising from Accredited Investors vs Equity Crowdfunding

Reg CF: equity crowdfunding for the retail public

Regulation Crowdfunding lets any US startup raise up to $5M per 12 months from anyone — accredited or not — through a FINRA-registered funding portal. Per-investor caps are scaled to income and net worth, so most checks land between $100 and a few thousand dollars. You file a Form C before launch, deliver reviewed or audited financials depending on raise size, and report annually with Form C-AR.

Reg CF works best when:

• You want your customers and community to own equity.
• Your raise target is $250K to $5M and you're comfortable with hundreds of small checks.
• You want to market the round publicly without SEC qualification.

Reg D 506(c): raising from accredited investors, publicly

Regulation D is the private-offering exemption most of Silicon Valley uses. Under 506(c) you can market the raise publicly — the same channels as Reg CF — but every investor must be verified as accredited (income $200K+ / $300K joint, or $1M+ net worth ex-primary). There is no cap on raise size, no SEC qualification, no audit requirement, and no per-investor limit. You file a Form D notice within 15 days of the first sale and that's it.

Reg D 506(c) works best when:

• Your typical check size is $25K+ from accredited angels, family offices, or Investment Clubs.
• You need to close in weeks, not months, and can't wait on audits.
• You want to raise more than $5M in a 12-month window.
• You still want to market the round publicly (podcasts, webinars, LinkedIn, newsletters).

How Investment Clubs use Reg D to secure larger checks

An Investment Club is a small, structured group of accredited investors that pools capital and diligence into a single commitment. Because every member is already accredited, the group fits cleanly under Reg D 506(c) — no per-investor caps, no portal fees, and one signed subscription agreement instead of hundreds.

Founders working with Investment Clubs typically see:

• Single-club commitments in the $100K–$1M range.
• Faster diligence — one point of contact runs the process for the whole group.
• Less friction at close — accredited verification once, one wire, one cap-table entry (usually an SPV).
• A reusable warm network — clubs that back you once are often first-look on the next round.

Compliance side by side

Reg CF sits on more compliance rails: registered portal, Form C pre-launch, reviewed or audited financials, per-investor caps, ongoing Form C-AR reports. Reg D 506(c) is lighter — the SEC only asks for a Form D notice — but you take on the burden of verifying accreditation for every investor and keeping those records. Neither exemption removes state notice filings (blue-sky), and both offerings trigger a 12-month resale restriction on the securities you issue.