Reg A+ vs. Reg D vs. Reg CF: Understanding Securities Exemptions

When a private company wants to raise money by selling securities, it generally has two options: register the offering with the SEC (an expensive and time-consuming process) or use an exemption from registration. Most private companies choose the exemption route. The three most common exemptions — Regulation A+, Regulation D, and Regulation Crowdfunding (Reg CF) — each have different rules about who can invest, how much can be raised, and what disclosures are required. Understanding these differences helps you make sense of the offerings you encounter on platforms like StartEngine and beyond.

The Big Picture

All three regulations serve the same basic purpose: they allow companies to sell securities to investors without going through a full SEC registration (i.e., without doing a traditional IPO). But they were designed for different use cases and different types of companies and investors.

Max raise

• Reg CF: $5 million/year
• Reg A+ (Tier 2): $75 million/year
• Reg D (506b/506c): Unlimited

Who can invest

• Reg CF: Everyone
• Reg A+ (Tier 2): Everyone
• Reg D (506b/506c): Accredited only (506c) or up to 35 non-accredited (506b)

Investment limits

• Reg CF: Yes, for non-accredited
• Reg A+ (Tier 2): 10% of income/net worth for non-accredited
• Reg D (506b/506c): None

SEC filing

• Reg CF: Form C
• Reg A+ (Tier 2): Form 1-A (SEC qualification required)
• Reg D (506b/506c): Form D (notice filing)

Financial statements

• Reg CF: Required (reviewed/audited based on amount)
• Reg A+ (Tier 2): Audited, required
• Reg D (506b/506c): Varies

General solicitation

• Reg CF: Yes (through platform)
• Reg A+ (Tier 2): Yes
• Reg D (506b/506c): Yes (506c) / No (506b)

Ongoing reporting

• Reg CF: Annual report
• Reg A+ (Tier 2): Semi-annual and annual reports
• Reg D (506b/506c): None required

Typical platform

• Reg CF: Funding portals (e.g., StartEngine)
• Reg A+ (Tier 2): Broker-dealers or funding portals
• Reg D (506b/506c): Direct or through broker-dealers

Regulation Crowdfunding (Reg CF)

Overview

Reg CF was created by Title III of the JOBS Act and went into effect in 2016. It was specifically designed to allow startups and small businesses to raise capital from everyday investors through online platforms.

Key Features

• Maximum raise: $5 million in a 12-month period
• Investor eligibility: Open to all investors, both accredited and non-accredited
• Investment limits: Non-accredited investors are limited based on their income and net worth. If both are under $124,000, you can invest the greater of $2,500 or 5% of the lesser of your income or net worth. If either exceeds $124,000, you can invest up to 10% of the lesser (capped at $124,000 total across all Reg CF offerings in a 12-month period).
• Platform requirement: Must be conducted through an SEC-registered funding portal or broker-dealer
• Disclosures: Companies must file a Form C with the SEC, including financial statements, business description, risk factors, use of proceeds, and officer/director information
• Ongoing reporting: Companies must file an annual report with the SEC

Best For

• Early-stage companies raising smaller amounts of capital
• Companies that want to raise money from their customer base and community
• Investors who want to invest small amounts in startups and small businesses

Considerations

• The $5 million cap limits the size of companies that use Reg CF exclusively
• Investment limits can constrain how much non-accredited investors can deploy
• Financial disclosures, while required, are less extensive than Reg A+

Regulation A+ (Tier 2)

Overview

Regulation A+ was modernized by Title IV of the JOBS Act (effective 2015) and is sometimes called a "mini-IPO." It allows companies to raise significant capital from all investors, with more robust disclosure requirements than Reg CF.

Key Features

• Maximum raise: $75 million in a 12-month period
• Investor eligibility: Open to all investors
• Investment limits: Non-accredited investors may invest up to 10% of the greater of their annual income or net worth (self-certified). No limits for accredited investors.
• SEC qualification: The offering must be reviewed and "qualified" by the SEC before it can launch — a process that typically takes several months
• Disclosures: Companies must file a Form 1-A with the SEC, including audited financial statements and detailed business information
• Ongoing reporting: Semi-annual and annual reporting requirements, similar (but less extensive) to public company reporting
• Trading: Reg A+ securities are not subject to resale restrictions, meaning they can potentially be traded on secondary markets immediately

Best For

• Growth-stage companies raising larger amounts of capital
• Companies considering an eventual IPO (Reg A+ serves as good practice for public reporting)
• Investors looking for offerings with more robust disclosures and potential for near-term liquidity

Considerations

• The SEC qualification process is more expensive and time-consuming than Reg CF
• Audited financial statements are required, adding cost for the company
• Despite the higher regulatory burden, Reg A+ provides a more institutional-quality investment experience

Regulation D

Overview

Regulation D is the oldest and most widely used exemption for private offerings. It predates the JOBS Act and has been the primary mechanism for private equity, venture capital, and other institutional fundraising for decades.

Reg D has two main variants:

• Rule 506(b): Companies can raise unlimited capital but cannot publicly advertise the offering. Up to 35 non-accredited (but "sophisticated") investors may participate, alongside unlimited accredited investors.
• Rule 506(c): Companies can raise unlimited capital and can publicly advertise the offering, but all investors must be verified accredited investors.

Key Features

• Maximum raise: Unlimited
• Investor eligibility: Primarily accredited investors. Rule 506(b) allows up to 35 non-accredited sophisticated investors; Rule 506(c) is accredited only.
• Investment limits: None
• SEC filing: A Form D notice must be filed with the SEC within 15 days of the first sale, but this is a brief notification, not a substantive review
• Disclosures: No specific disclosure format is required by the SEC, though companies must provide sufficient information for investors to make informed decisions. In practice, companies typically provide a private placement memorandum (PPM).
• Ongoing reporting: None required by the SEC (though companies may have reporting obligations to investors contractually)

Best For

• Companies raising large amounts of capital from institutional and accredited investors
• Venture capital and private equity transactions
• Companies that want flexibility and minimal regulatory overhead

Considerations

• Most offerings are limited to accredited investors, excluding the majority of the population
• Less regulatory oversight means investors must rely more heavily on their own due diligence
• No SEC review of offering materials

How These Exemptions Work on Platforms

On platforms like StartEngine, you'll encounter offerings under both Reg CF and Reg A+. Here's what that means in practice:

Reg CF offerings tend to be from earlier-stage companies raising smaller amounts. Investment minimums are typically low ($100 to $500), and the platform provides the Form C disclosures for your review.

Reg A+ offerings tend to be from more established companies raising larger amounts. The SEC qualification process means these offerings have been through a more rigorous review. These offerings may offer the potential for secondary trading of shares.

Reg D offerings are less common on retail-facing platforms but may appear for accredited investors. These are typically larger, more institutional deals.

Which Is Best for Investors?

There's no single "best" regulation — it depends on your situation:

• Non-accredited investors will primarily invest through Reg CF and Reg A+ offerings, as Reg D offerings typically require accreditation.
• Accredited investors have access to all three types and can choose based on the quality of the specific opportunity.
• Investors seeking more disclosure may prefer Reg A+ offerings, which require audited financials and ongoing reporting.
• Investors seeking smaller, earlier-stage deals will find many options under Reg CF.

Conclusion

Reg A+, Reg D, and Reg CF are the three pillars of private securities offerings in the United States. Each serves a different niche in the capital-raising ecosystem, balancing the needs of companies for capital with the need to protect investors.

As an investor, understanding which regulation governs a particular offering helps you assess the quality of disclosures, know your investment limits, and understand the regulatory protections in place. Regardless of the exemption type, the fundamentals of good investing remain the same: do your due diligence, diversify your investments, and only invest what you can afford to hold for the long term.