Regulation Crowdfunding: A Complete Guide

Raising capital from the public used to be a legal minefield for private companies. Before 2012, offering equity to anyone who wasn’t an accredited investor meant navigating securities laws designed for Wall Street, not founders.

The JOBS Act changed that. The specific provision that opened the door for everyday investors to back private companies is called Regulation CF, also known as Reg CF.

This guide covers the full mechanics: what Reg CF is, how the raise process actually works, what it costs, what filings you’re required to make, and how it compares to other SEC exemptions. If you’re a founder evaluating whether equity crowdfunding is the right path for your round, this is what you need to understand before making that call.

What Is Reg CF?

Reg CF, short for Regulation Crowdfunding, is an SEC exemption under Title III of the JOBS Act that allows private companies to raise capital from the general public, including non-accredited investors, without registering the offering as a public securities offering.

Before Reg CF, you could only solicit investments from accredited investors (people with a net worth over $1M excluding their primary residence, or annual income above $200K) or go through a full SEC registration, which costs millions and takes years. The rule changed that by creating a regulated middle path: a structured exemption specifically designed for online capital formation.

Reg CF officially went into effect in May 2016. The SEC expanded the rules in March 2021, raising the raise cap and adjusting investment limits.

Reg CF at a Glance

Element	Detail
Raise limit	Up to $5 million per 12-month period
Who can invest	Accredited and non-accredited investors
Where you can raise	Must use a registered funding portal or broker-dealer
Required filing	Form C (with the SEC)
Investment limits	Yes, based on investor income and net worth
Resale restrictions	1-year holding period (with exceptions)
Testing the waters	Permitted before filing Form C
Bad actor rules	Applies; disqualifying events reviewed
Escrow	Required; funds held until target minimum is met

The $5M Raise Cap: What It Actually Means

A Reg CF offering cannot raise more than $5 million in any 12-month period. That ceiling includes all prior Reg CF raises in that window, not just the current campaign.

For founders, this number is meaningful in both directions. Five million dollars is enough to fund a serious seed round for most companies outside of capital-intensive industries. It’s also a hard ceiling, which means if you’ve already raised $2M under Reg CF in the last year, your next campaign can only take in $3M more under this exemption.

If you need to raise beyond $5M, you’re looking at Reg A (up to $75M per year, with two tiers and a more intensive disclosure process) or Reg D (no dollar cap, but accredited investors only). Both are discussed briefly at the end of this guide.

Who Can Invest in a Reg CF Offering?

This is one of the most significant features of Reg CF compared to other SEC exemptions: both accredited and non-accredited investors can participate.

That matters for founders because it converts your customer base, your community, and your early supporters into a pool of potential capital. Under Reg D, none of them could legally invest unless they met the accredited investor threshold. Under Reg CF, the question is simply how much they can invest.

Investment limits for non-accredited investors are calculated using the greater of annual income or net worth:

If both annual income and net worth are below $124,000, the investor can contribute the greater of $2,500 or 5% of whichever is higher.
If either annual income or net worth is $124,000 or more, the investor can contribute up to 10% of whichever metric is higher, up to a maximum of $124,000 per year across all Reg CF offerings.

Accredited investors have no Reg CF-specific investment limits on individual offerings, though platforms may set their own minimums.

These limits reset annually and apply per investor across all Reg CF campaigns, not per company. So an investor spreading $5,000 across three Reg CF offerings has used $5,000 of their annual limit.

What Filings Are Required: Form C

To conduct a Reg CF offering, issuers must file Form C with the SEC. This is the core disclosure document for the offering and must be completed before you begin accepting investments.

Form C includes:

Company information: legal name, principal office, jurisdiction of incorporation, website
Offering details: target raise amount, maximum raise amount, offering deadline, use of proceeds
Financial statements: the level of review required depends on how much you’re raising:
- Under $124,000: officer-certified financials
- $124,000 to $618,000: reviewed financials from an independent accountant
- $618,000 to $1.235M: reviewed financials (or audited if you’ve previously conducted Reg CF)
- Above $1.235M: audited financial statements
Related party transactions: any dealings between the company and officers, directors, or major shareholders
Risk factors: material risks the investor should understand before investing
Ownership structure: breakdown of outstanding securities and ownership percentages

The filing is public. Anyone can read it on the SEC’s EDGAR database. That’s by design. Reg CF is built on transparency as the mechanism for investor protection.

After the campaign closes, issuers are required to file Form C-U, reporting the total amount raised. Ongoing annual reporting is required via Form C-AR until the company either has more than $10M in assets and 2,000+ shareholders (triggering full reporting requirements), completes an exchange offering, or files for dissolution.

How the Raise Process Works, Step by Step

Step 1: Choose a registered funding portal or broker-dealer

You cannot conduct a Reg CF raise on your own website. The offering must be hosted through either an SEC-registered funding portal (like Planet Wealth) or a registered broker-dealer. The intermediary is legally required to perform due diligence on issuers, including background checks and bad actor screening.

Step 2: Test the waters (optional but recommended)

Before filing Form C, companies are permitted to gauge investor interest publicly. This means you can post a brief campaign description, share it with potential investors, and collect non-binding expressions of interest. Testing the waters helps you gauge whether the campaign is viable before committing to the disclosure and filing costs.

Step 3: File Form C with the SEC

Once you decide to proceed, your Form C goes to the SEC. The funding portal reviews the filing concurrently. You cannot begin accepting investments until this step is complete.

Step 4: Launch the campaign

Live campaigns typically run 30 to 90 days. During this window, investors review your offering materials, ask questions on the campaign page, and commit funds. All investor commitments are held in escrow until you hit your target minimum.

Step 5: Close or extend

If you hit your target minimum before the deadline, you can close and receive funds, or keep the campaign open to continue raising up to the maximum. If you miss your minimum, all committed funds are returned to investors. No money changes hands until the minimum is met.

Rolling closes, where you accept funds in tranches as milestones are hit, are permitted under Reg CF, which gives founders more flexibility in structuring longer campaigns.

Step 6: Post-close filings

File Form C-U with the SEC to confirm the final raise amount. Funds are released from escrow. Securities are issued to investors.

What It Costs Founders

Reg CF is not free to execute. The major cost categories:

Platform fees: Funding portals typically charge a percentage of total funds raised, commonly in the 4 to 8% range, sometimes supplemented by equity or warrants.

Financial statement preparation: Depending on your raise size, you’ll need reviewed or audited financials. Reviewed financials from an independent accountant typically run $3,000 to $15,000. Audits can run higher depending on company complexity.

Legal fees: Form C preparation, offering documents, and securities counsel typically add $5,000 to $20,000 for a first-time raise.

Marketing: Running a successful Reg CF campaign requires real marketing effort. Video, email, and paid distribution are usually required if you want to reach your target. Budget varies widely, but underfunded campaigns are a common reason for failure.

The total cost of a Reg CF campaign on a $500,000 raise might run $30,000 to $60,000 when you account for platform fees, financials, legal, and marketing. On a $2M raise, the fixed costs are roughly the same, so the economics improve materially at scale.

One thing worth factoring into your platform selection: not all funding portals are structured the same way. Some require you to source your own legal counsel, accounting firm, and marketing support separately, which means coordinating multiple vendors while simultaneously running a live raise.

Some platforms (including Planet Wealth) handle these functions in-house, which reduces coordination overhead.

If keeping your attention on your business during the raise matters to you, it’s a practical criterion to evaluate before you commit.

What Reg CF Does Not Require

Founders sometimes assume Reg CF involves the same disclosure infrastructure as a public offering. It doesn’t.

You do not need to register with the SEC as a public reporting company. You do not need a prospectus. You are not subject to the same ongoing disclosure and communication rules that apply to public companies. Reg CF is a disclosure-based exemption, not full registration. The obligations are real but materially lighter than those of an IPO or S-1 filing.

Reg CF vs. Reg A vs. Reg D

These are the three primary SEC exemptions used for private capital raises. The table below covers how they differ on the dimensions that matter most to founders.

	Reg CF	Reg A	Reg D
Raise limit	$5M/year	$75M/year	No cap
Non-accredited investors	Yes	Yes (Tier 1 and 2)	No
SEC qualification	No (only filing)	Yes (offering must be qualified)	No
Financial disclosure	Yes (scaled to raise size)	Yes (more extensive)	Limited
Platform requirement	Yes (registered intermediary)	No	No
Typical use case	Community rounds, seed, early-stage	Growth-stage raises, larger audiences	Institutional/angel rounds

Reg A is significantly more expensive and time-consuming to execute. The SEC must qualify the offering before it goes live, which can take months and requires a more extensive disclosure package, closer in burden to a mini-IPO. It’s worth the investment at larger raise sizes, but overkill for most early-stage founders.

Reg D (Rule 506) is the most commonly used exemption for venture-backed companies. It has no dollar limit and minimal disclosure requirements, but access is restricted to accredited investors only. That makes it the right tool for raising from institutional funds, angels, and high-net-worth individuals, but it cuts off your community and customer base as a capital source.

Reg CF sits between the two: meaningful access, real obligations, and a framework designed specifically for founders who want to raise from a broad audience without triggering full public company requirements.

Bad Actor Disqualification

Reg CF includes a bad actor disqualification provision. If the company, its officers, directors, or more than 20% shareholders have been subject to certain legal or regulatory actions, including SEC enforcement orders, felony convictions, restraining orders in securities matters, or FINRA suspensions, the company cannot use Reg CF.

The funding portal is required to verify this as part of its due diligence review before hosting an offering. This is one reason working with a FINRA-registered intermediary matters: the bad actor check is mandatory, not discretionary.

Frequently Asked Questions

What is Reg CF?

Reg CF (Regulation Crowdfunding) is an SEC exemption under Title III of the JOBS Act that allows private companies to raise up to $5 million per year from both accredited and non-accredited investors through a registered funding portal or broker-dealer. Unlike Reg D, which limits participation to accredited investors, Reg CF opens capital raises to the general investing public.

What is a Reg CF offering?

A Reg CF offering is a securities offering conducted under the Regulation Crowdfunding exemption. The company files Form C with the SEC, hosts the campaign through a registered intermediary, and accepts investments from members of the public within applicable investment limits. Funds are held in escrow until the campaign hits its minimum target.

What are the key provisions of Reg CF?

The core provisions are: a $5M annual raise cap; mandatory use of a registered funding portal or broker-dealer; Form C disclosure filing with the SEC; scaled financial statement requirements based on raise size; investment limits for non-accredited investors; a one-year resale restriction on securities purchased; and bad actor disqualification rules for issuers and their principals.

What is Regulation Crowdfunding (Reg CF)?

Regulation Crowdfunding is the formal name for the SEC rule framework that governs equity crowdfunding in the United States. It was created under Title III of the JOBS Act of 2012 and became effective in May 2016. The SEC expanded the rules in 2021, raising the raise cap from $1.07 million to $5 million.

How does equity crowdfunding work?

A company chooses a registered funding portal, prepares its Form C filing and offering materials, files with the SEC, and then launches a public campaign. Investors review the offering, commit funds (which go into escrow), and the company receives funds only if it hits its minimum raise target within the campaign window. Securities are then issued to investors, subject to a one-year holding period.

Can accredited investors invest in Reg CF?

Yes. Accredited investors can invest in Reg CF offerings alongside non-accredited investors. Reg CF does not restrict participation based on accreditation status. Accredited investors are not subject to the per-investor dollar limits that apply to non-accredited investors under Reg CF.

The Case for Reg CF in a Realistic Capital Stack

Equity crowdfunding gets dismissed by some founders as a fundraising path for companies that “couldn’t get VC.” This doesn’t always have to be true.

At its core, Reg CF is a capital structure decision. It converts existing customer relationships and community into an investor base. It creates marketing momentum during the campaign. It results in a broad shareholder group that has a financial stake in seeing the company succeed. And it preserves more founder control than a typical VC round, where governance terms, liquidation preferences, and board composition can significantly constrain future flexibility.

The question isn’t whether your company is “ready for VC.” It’s whether the structure of a Reg CF raise fits your stage, your community, and your capital needs. For F&B founders, energy companies, and SaaS founders who have real customer traction and a community that believes in what they’re building, Reg CF often fits better than any other option.

Ready to evaluate whether a Reg CF offering makes sense for your raise?

Book a free raise consultation with our experts. You’ll get a direct walkthrough of your current capital position, raise goals, and whether equity crowdfunding is the right structure for your next round.

We value your privacy

Reg CF (Regulation CF) Explained: The SEC Rule That Makes Equity Crowdfunding Legal