A coffee roaster in Portland raised $1.2 million from 3,400 of its own customers. A solid-state battery startup in Ohio raised the full $5 million cap from 8,900 investors who each kicked in an average of $560. A craft distillery in Texas sold revenue-share notes to the same locals who fill its tasting room every Saturday. None of them filed an S-1. None of them paid an investment bank. None of them had to be accredited investors on the other side of the table.
What they used was Regulation Crowdfunding, also known as Reg CF, an exemption under Section 4(a)(6) of the Securities Act that lets a private U.S. company sell securities to the general public on an SEC-registered funding portal. The framework is now nearly ten years old, the dollar limits have been raised twice, and on February 17, 2026 the SEC's Division of Corporation Finance published a fresh round of Compliance and Disclosure Interpretations that tightened up how rolling closings, testing-the-waters communications, and platform transfers are supposed to work.
If you are a founder weighing a Reg CF round, an early employee being asked to vote on one, or an angel investor trying to understand why your portfolio company is suddenly talking to Wefunder, this guide walks through the rules that actually bind, the forms that have to get filed, and the bookkeeping that gets messy fast if no one is paying attention.
What Section 4(a)(6) Actually Exempts
Every sale of a security in the United States either has to be registered with the SEC under the Securities Act of 1933, which is the full IPO-style process most companies cannot afford, or fit inside a registration exemption. Section 4(a)(6), added by the JOBS Act of 2012 and made operational by Regulation Crowdfunding in 2016, is one of those exemptions.
In plain English, it lets a non-reporting U.S. company offer and sell securities to anyone, including non-accredited investors, as long as the offering runs through a single SEC-registered intermediary that is either a funding portal or a broker-dealer. The company files an offering statement on Form C, follows specific disclosure and advertising rules, and stays within annual dollar limits. In exchange, the company avoids the full registration process and the securities can be issued to as many investors as the platform will accept.
What the exemption does not do is preempt state blue-sky law for everything. It does preempt state registration of the securities themselves, which is the practical reason Reg CF is workable across all 50 states without filing 50 separate state offerings. States can still require notice filings and collect fees.
The $5 Million Cap and Why the Clock Is Rolling
Rule 100(a)(1) limits the issuer to a maximum of $5 million in any 12-month period. That number was originally $1 million in 2016, jumped to $5 million in March 2021 when the SEC overhauled the exempt-offering framework, and has stayed there since.
A point that catches a lot of issuers off guard, and that the SEC reinforced in its 2026 C&DI update, is that the 12-month period rolls. It is not a calendar year. The cap is measured looking backward from the date of each closing, so if you close on a Reg CF raise in November 2025 for $3 million and then try to launch a second campaign that closes in March 2026, the math is $3 million plus whatever you close in March, all measured inside the trailing twelve months.
If you misjudge that window and accept subscriptions that push you over $5 million in the rolling period, you are no longer inside the exemption and the entire offering can be unwound. Issuers running rolling closings inside a single campaign now have to be especially careful, because every closing is its own measurement date.
Who Cannot Use Reg CF
Reg CF is open to U.S.- and Canadian-organized companies that are not already SEC-reporting public companies. The list of issuers who are flatly ineligible includes:
- Non-U.S. and non-Canadian companies
- Companies already required to file periodic reports under the Exchange Act
- Certain investment companies, including most pooled investment vehicles
- Companies disqualified under Rule 503's "bad actor" rules
- Companies that have failed to file the required ongoing reports for the two years before the new offering
- Blank-check or shell companies with no specific business plan, or whose plan is to merge with an unidentified company
The bad-actor provision is the one most founders learn about by accident. Rule 503 sweeps in the issuer itself, every officer and director, the placement agent, every 20-percent voting-equity beneficial owner, and certain promoters and solicitors. If any of those people have been hit with a securities-fraud conviction, an SEC cease-and-desist order, a state regulator suspension, or a long list of other "disqualifying events" within a defined look-back period, the offering is disqualified unless a waiver is obtained. The 2026 C&DI update reinforced that this inquiry has to be factual and documented, not a one-line representation in a subscription agreement.
What the Investor Side Looks Like
One of the defining features of Reg CF is that anyone can invest, but how much depends on their income and net worth. The threshold is now indexed and currently sits at $124,000.
If an investor's annual income or net worth is less than $124,000, they can invest the greater of $2,500 or 5 percent of the greater of those two amounts in a 12-month period across all Reg CF offerings combined. If both numbers are equal to or above $124,000, the limit rises to 10 percent of the greater of the two, capped at $124,000 per year. Accredited investors, who under the SEC's definition generally have $200,000 in annual income, $300,000 in joint income with a spouse, or more than $1 million in net worth excluding their primary residence, have no investment cap under Reg CF.
The 2026 C&DI guidance clarified that "annual income" for these purposes refers to a calendar year, matching the way the term is used under Regulation D. Platforms self-certify these limits at checkout, but the rule lives with the investor.
Form C: The Offering Statement
Once an issuer decides to run a Reg CF offering, the central regulatory artifact is Form C. It is filed electronically on EDGAR, served up alongside the offering on the funding portal, and amended whenever something material changes.
Form C is not a 200-page prospectus, but it is not a one-pager either. Required disclosures include:
- The legal name, jurisdiction of organization, physical address, and website of the issuer
- The names of directors, officers, and beneficial owners of 20 percent or more of voting equity
- A description of the business and the anticipated business plan
- A description of how the company intends to use proceeds, at both the minimum and maximum target amounts
- The target offering amount, the deadline, and whether oversubscriptions will be accepted
- The price of the securities or the method for determining the price
- A description of the securities being offered, including any voting rights, dilution risks, and restrictions on transfer
- The capital structure and ownership of the issuer, including any prior exempt offerings
- Material risk factors specific to the company and the offering
- Related-party transactions involving directors, officers, or 20-percent holders
- Financial condition, including a management discussion that walks through historical results and known trends
- Financial statements covering the two most recent fiscal years, prepared under U.S. GAAP
The amount being raised determines how heavily those financial statements have to be vetted. For offerings up to $124,000, the principal executive officer can certify the financial statements themselves. For offerings above $124,000 and up to $618,000, the statements must be reviewed by an independent public accountant. For offerings above $618,000, the statements must be audited, with one exception: a first-time Reg CF issuer can stay at the reviewed level until the raise exceeds $1,235,000. Repeat issuers cross the audit threshold at $618,000 with no first-timer break.
This step is where many founders learn that the cost of "raising from the crowd" is not just the platform fee. A CPA review of two years of GAAP financials for an early-stage company commonly runs $7,500 to $15,000. A full audit can easily run $25,000 to $60,000. Build that line into the budget before you decide what amount to target.
Funding Portals: Wefunder, StartEngine, Republic, and the Rest
Reg CF cannot be conducted directly. Every offering has to flow through a single intermediary, and that intermediary must be either a registered broker-dealer or an SEC-registered funding portal that is also a FINRA member.
In 2026, the largest portals by cumulative capital raised are Wefunder, StartEngine, Republic, NetCapital, and SeedInvest, alongside a long tail of newer and vertical-focused platforms. Each one publishes its own fee schedule, its own list of permitted security types, and its own diligence checklist. Typical economics include:
- A success fee of 5 to 8 percent of the amount raised, sometimes paid in cash, sometimes split between cash and securities of the issuer
- Upfront listing or onboarding fees in the low thousands
- Escrow, transfer agent, and electronic filing fees that add another few thousand dollars
- Optional marketing add-ons that the platform sells separately
A portal cannot offer investment advice, cannot solicit investments in specific issuers, and cannot pay finders. What it does is host the offering page, run the bad-actor check on the issuer's covered persons, collect investor representations, hold funds in escrow until the target is met, and route any required filings.
The 2026 C&DI update spent significant time on what happens when an issuer wants to move between platforms mid-offering. The short version: the original platform has to close out its piece of the offering and any new platform has to refile, because Reg CF requires a single intermediary per offering. Splitting investors across two portals inside one campaign is not permitted.
Testing the Waters Before You File
Since the 2021 amendments, an issuer can "test the waters" before deciding whether to file a Form C. The point is to gauge interest without committing to the full disclosure and audit cost.
Solicitations during this period can be oral or written, can go to anyone, and can use any medium, but they have to include three legends in substance:
- No money or other consideration is being solicited and, if sent, will not be accepted
- No offer to buy can be accepted and no part of the purchase price can be received until the issuer determines the exemption and meets its requirements
- An indication of interest involves no obligation or commitment of any kind
The issuer also has to keep all testing-the-waters materials in case the SEC asks for them later. Once Form C is filed and the offering is live, the regular advertising restrictions kick back in.
Advertising Restrictions Once the Offering Is Live
Reg CF's advertising rule, often called the "tombstone" rule, is one of the most-violated provisions in the regulation. Once the offering is live, the issuer may not advertise the terms of the offering anywhere outside the funding portal, except in communications that contain no more than:
- A statement that the issuer is conducting an offering under Section 4(a)(6)
- The name of the intermediary and a link to its platform
- The terms of the offering, meaning the amount, the type and price of the securities, the closing date, the use of proceeds, and progress toward the target
- Factual information about the issuer's legal identity and business location
In practice, this means a tweet that says "We're raising on Wefunder, $5 per share, closing March 1, click here" is fine. A tweet that includes a pitch for why the security is a good investment, or that promises a specific return, is not. The issuer can communicate freely with potential investors inside the funding portal's discussion threads, because those communications happen on the platform.
The February 2026 C&DI update added some color on third-party media risk. If an issuer pays a podcaster or a newsletter to promote the offering and that promotion goes beyond the tombstone limits, the issuer is on the hook, not the third party. Reposts and amplifications by people who are not paid are fine; sponsored content is not.
Ongoing Reporting After You Close
A Reg CF offering does not end when the money hits the bank. Three follow-on filings get added to the issuer's calendar:
Form C-U (Progress Update). Must be filed within five business days of crossing 50 percent and again at 100 percent of the target offering amount. If the issuer accepts oversubscriptions, a final Form C-U is due within five business days of the offering deadline to disclose the actual total raised.
Form C-AR (Annual Report). Must be filed within 120 days after the issuer's fiscal year-end, every year, until one of the exit triggers is met. The C-AR includes updated GAAP financial statements (which do not have to be reviewed or audited unless the issuer's bylaws require it), an updated business discussion, and an update on use of proceeds. Skipping this filing is the single most common compliance failure in Reg CF, and missing two C-ARs in a row disqualifies the company from running another Reg CF offering for two years.
Form C-TR (Termination of Reporting). Filed when the issuer becomes eligible to stop filing annual reports. Exit triggers include becoming an Exchange Act reporting company, filing at least one C-AR and having fewer than 300 record holders, filing at least three C-ARs and having total assets at or below $10 million, repurchasing all the Reg CF securities, or liquidating.
The 2026 C&DI update added one more wrinkle: if an offering is still open on the issuer's fiscal year-end, the issuer has to file a Form C/A with updated financials, a Form C-AR, and a Form C-U all within 120 days. Rolling-close issuers should mark those dates carefully.
The Bookkeeping Side No One Talks About
Most coverage of Reg CF stops at the regulatory checklist. The accounting consequences are where founders trip up months after the campaign closes, often when their first post-raise audit or due-diligence process surfaces problems that should have been booked correctly at the time.
A few areas that consistently need attention:
Classifying the security. What you sold determines how it sits on your balance sheet. Common stock and preferred stock are equity. Convertible notes are debt (with an embedded conversion feature) until they convert. Revenue-share notes are debt. SAFEs are the gray area: under current SEC and FASB guidance, most SAFEs sold on Reg CF platforms get classified as a liability, often within "SAFE liability" or "investor financing" on the balance sheet, because they contain a redemption feature in liquidation and a contingent obligation to issue a variable number of shares. They are not equity, and they are not a standard debt instrument. Treating them as equity prematurely is a common error that surfaces during the next priced round.
Offering costs. Platform fees, legal fees, accounting review or audit fees, and EDGAR filing costs add up. Under U.S. GAAP, costs that are direct and incremental to the issuance of equity securities are generally netted against the proceeds in stockholders' equity rather than expensed. Costs related to debt issuance are generally capitalized as a deferred asset and amortized over the life of the debt. SAFE issuance costs are typically expensed because of the SAFE's liability classification. Many startups simply expense everything as legal and professional fees, which understates equity and overstates expenses in the year of the raise.
Subscription cash and escrow. Cash sitting in the platform's escrow account before the offering closes does not belong to the issuer yet. Record it only when the offering closes and the funds are released. If you have rolling closings, record each tranche on its own release date.
Cap table updates. Every Reg CF investor either appears on the cap table directly or, more commonly now, through a "crowdfunding vehicle" that holds the securities on behalf of the crowd. The 2021 amendments authorized these vehicles specifically to keep the cap table from ballooning to thousands of line items, which would make any future M&A or priced-round signing a nightmare. The vehicle is treated as a single holder for cap-table purposes, but its underlying investors still have economic rights, and the issuer is still required to maintain a current list of beneficial owners for SEC purposes.
Annual report financials. The C-AR has to include current-year GAAP financials. If your bookkeeping has drifted, you will discover it in late February or early March of the following year when the 120-day clock is already running.
A Practical Sequence for a Founder Considering Reg CF
If you are thinking about a Reg CF round, a reasonable order of operations looks like this:
- Decide on the security. Equity, SAFE, convertible note, or revenue share. Each has different downstream consequences for accounting, dilution, and future fundraising.
- Estimate the all-in cost. Platform fees, legal fees, accounting prep, audit if needed, marketing budget. Run two scenarios: minimum target and maximum target.
- Run the bad-actor check early. This is paperwork the platform will eventually require anyway, but discovering a problem after you have spent $30,000 on financial statements is much worse than discovering it on day one.
- Get the financials in order. Two years of clean, GAAP-basis books are the gating item for any Reg CF raise above $124,000. If your books are on cash basis or live half in a spreadsheet, this is the most time-consuming step.
- Test the waters before filing Form C. Use the legends, save the materials, and gauge whether the demand justifies the cost of filing.
- File Form C and launch. Pay attention to the tombstone advertising rule, especially on social media.
- Schedule the post-close filings. Calendar the 50 percent and 100 percent C-U deadlines, the final C-U if oversubscribed, and the C-AR 120 days after fiscal year-end.
Common Mistakes That Sink Reg CF Issuers
Even with a well-run campaign, a handful of mistakes show up over and over:
- Ignoring the rolling 12-month cap. Treating it as a calendar-year limit is the fastest way to fall out of the exemption.
- Missing the bad-actor inquiry. A founder who reps "no disqualifying events" without actually doing the inquiry is exposed if it turns out a director's old SEC settlement was disqualifying.
- Advertising outside the tombstone. Pitching the offering on Twitter, YouTube, or a paid podcast in a way that goes beyond the permitted facts.
- Booking SAFEs as equity. Then having to restate when an auditor or acquirer pushes back.
- Skipping the C-AR. A single missed annual report can disqualify the issuer from running a follow-on Reg CF campaign for two years.
- Forgetting the state notice filings. Reg CF preempts state registration of the securities themselves, but a handful of states still require notice filings and fees, which are easy to overlook.
Keep Your Finances Organized From the First Subscription
A Reg CF raise puts you on the SEC's reporting radar, gives you a new class of investors who can read your annual report on EDGAR, and locks in accounting choices you will live with through your next priced round. The companies that come through it cleanest are the ones whose books were already in order, whose chart of accounts already had places for "SAFE liability" and "deferred offering costs," and whose financial statements could be exported on demand for the next C-AR.
Beancount.io provides plain-text, version-controlled accounting that is well-suited to that level of transparency: every entry is human-readable, every change is tracked, and your financials can be regenerated and audited at any point in time without depending on a proprietary database. Get started for free and keep your books in a state that survives whatever your next fundraise asks of them.