This article is for informational and research purposes only. We are not lawyers or registered investment advisers. Nothing here constitutes legal, financial, or securities advice. Before making any decisions about your capital raise, consult a qualified securities attorney.

Regulation Crowdfunding, commonly called Reg CF, is one of the most significant changes to U.S. securities law in a generation. It opened the capital markets to everyday investors and gave founders a legal, regulated path to raise money directly from the public without going through Wall Street, a venture firm, or an investment bank.

Most founders have heard of it. Far fewer understand how it actually works, what it requires, and whether it is the right tool for their raise. This guide covers all of it, in plain language, with the regulatory specifics that matter.

And if your raise needs to go bigger than $5 million, we will get to that too.

Where Reg CF Comes From

Before 2016, raising money from the general public meant registering a full public offering with the SEC, a process that cost hundreds of thousands of dollars in legal and accounting fees and was effectively unavailable to early-stage companies. The only legal path to raise from non-accredited investors was to go public. Everything else required limiting your raise to accredited investors, people who meet the SEC’s income or net worth thresholds under Rule 501 of Regulation D.

The JOBS Act changed that. Signed into law on April 5, 2012, the Jumpstart Our Business Startups Act directed the SEC to create a new exemption allowing private companies to raise capital from the general public through regulated online platforms. Title III of the JOBS Act established the framework. The SEC finalized the rules on October 30, 2015, under Release No. 33-9974, and they became effective on May 16, 2016, codified at 17 CFR Part 227.

In March 2021, the SEC significantly expanded the program under Release No. 33-10884, raising the offering cap from $1.07 million to $5 million in any 12-month period. That change was a turning point. It made Reg CF a serious capital raising tool rather than a symbolic one.

Since its launch, approximately 7,000 issuers have conducted roughly 8,500 Reg CF offerings, reporting a combined $1.3 billion in proceeds. The market has matured considerably and continues to grow.

What Reg CF Actually Allows You to Do

Reg CF allows a private company to offer and sell securities to the general public, including people who are not accredited investors, through a registered online platform. You do not need to file a full registration statement with the SEC. You do not need an investment bank. You do not need to limit your investor pool to wealthy individuals.

This is what direct-to-investor capital raising looks like in practice. Instead of pitching one partner at a venture firm, you are making your case to thousands of people simultaneously: customers, fans, community members, and retail investors who believe in what you are building. The capital comes from the crowd, not the conference room.

What you do need to make it happen:

• A completed Form C filed with the SEC before your offering goes live
• A registered broker-dealer or SEC-registered, FINRA-member funding portal to host the offering
• Financial statements that meet the requirements for your offering size
• Ongoing reporting obligations after a successful raise

In exchange, you can raise up to $5 million in a 12-month period from an essentially unlimited number of investors, accredited and non-accredited alike, in a fully legal and regulated offering.

The Key Rules Every Founder Needs to Know

The $5 Million Annual Cap

Under Rule 100(a)(1), an issuer may not raise more than $5 million through Reg CF in any 12-month period. This limit applies in aggregate across all platforms and all simultaneous Reg CF offerings. You cannot run two separate Reg CF campaigns at the same time on two different platforms to double your cap. The $5 million ceiling is absolute.

If you need to raise more than $5 million, Regulation A+ raises the ceiling to $75 million and is worth understanding as the next step up. We cover that in depth separately.

Who Can Invest and How Much

One of the most important features of Reg CF is that it is open to non-accredited investors. This is the foundation of direct-to-investor capital raising. You are not limited to wealthy individuals or institutional players. You can raise from your customers, your community, and everyday people who believe in what you are building.

Under SEC Rule 100(a)(2), non-accredited investors face annual limits on how much they can invest across all Reg CF offerings combined. The limits are calculated as follows:

• If both annual income and net worth are less than $124,000, the investor may invest the greater of $2,500 or 5% of the lesser of annual income or net worth
• If either annual income or net worth is $124,000 or more, the investor may invest up to 10% of the lesser of annual income or net worth, not to exceed $124,000 in a 12-month period

Accredited investors face no investment limits under Reg CF. Founders do not need to verify investor accreditation status under Reg CF, which is a meaningful operational simplification compared to Reg D Rule 506(c).

Who Can Use Reg CF

Not every company is eligible. Under Rule 100(b), Reg CF is not available to:

• Companies not organized under the laws of a U.S. state or territory or the District of Columbia
• Companies already subject to SEC reporting requirements under the Exchange Act
• Investment companies registered or required to be registered under the Investment Company Act of 1940
• Companies that have no specific business plan or have indicated their business plan is to engage in a merger or acquisition with an unidentified company (blank check companies)
• Companies disqualified under Rule 503, which covers issuers and certain related parties with prior securities law violations, criminal convictions, court injunctions, or regulatory orders

Foreign private issuers are also ineligible. Reg CF is a U.S.-only exemption for U.S.-organized companies.

The Platform Requirement

Every Reg CF offering must be conducted through a single intermediary: either a registered broker-dealer or a funding portal registered with the SEC and a member of FINRA. You cannot sell Reg CF securities directly to investors on your own website without going through a registered intermediary. This is a hard requirement, not a recommendation.

The major platforms operating in this space include Wefunder, StartEngine, Republic, and DealMaker Securities, each with different fee structures, investor bases, and strategic profiles. Choosing the right platform is a meaningful decision that affects how your raise performs. We cover each platform in depth separately.

Form C: Your Offering Document

Before your offering can go live, you must file a Form C with the SEC through EDGAR. Form C is your primary disclosure document. It must include:

• A description of the business and its officers and directors
• The intended use of proceeds
• The target offering amount and the deadline to reach it
• The price of the securities or the method for determining the price
• A description of the ownership and capital structure
• Financial condition of the issuer
• Financial statements meeting the applicable requirements
• Related party transaction disclosures
• Risk factors

This is a real disclosure document with real legal consequences. Material misstatements or omissions in a Form C can expose issuers to SEC enforcement and civil liability. Work with a qualified securities attorney to prepare it.

Financial Statement Requirements

Under Rule 201(t), the financial statement requirements for Reg CF scale with the size of the offering:

• Raises up to $124,000: Financial statements certified by the principal executive officer, reviewed by an independent accountant if available
• Raises between $124,000 and $618,000: Financial statements reviewed by an independent public accountant
• Raises between $618,000 and $1.235 million: Audited financial statements, or reviewed statements if audited statements are not available and this is the issuer’s first Reg CF offering
• Raises above $1.235 million: Audited financial statements required

Getting your financials in order early is one of the most important steps in the timeline. Accounting reviews and audits take time. Founders who underestimate this step consistently delay their launch.

What Happens During the Offering

Once your Form C is filed and your campaign goes live on a registered platform, investors can begin committing funds. A few important mechanics to understand:

Minimum and Maximum Targets

Every Reg CF offering must specify a target offering amount, which is the minimum the issuer needs to proceed. If the offering does not reach its minimum by the deadline, all investor funds must be returned. You can set a minimum well below your maximum to reduce the risk of a failed raise, but the minimum must reflect what you actually need to execute your stated use of proceeds.

The Cancellation Window

Under Rule 303(g), investors have the right to cancel their commitment for any reason up until 48 hours before the offering deadline. This means your campaign momentum needs to hold through the final stretch, not just launch week. Consistent investor communications throughout the campaign is what keeps early commitments from walking away before close.

Material Changes

If there is a material change to the offering after investors have committed, the issuer must notify investors and give them the opportunity to reconfirm their investment within five business days under Rule 304. Failing to handle material changes correctly is a common compliance error.

Testing the Waters

Under the SEC’s 2020 amendments, issuers are permitted to solicit indications of interest from potential investors before filing a Form C. This is called testing the waters and it is one of the most valuable strategic tools available to a founder preparing a retail raise. It allows you to gauge demand, refine your messaging, build a committed audience, and generate pre-launch momentum before your offering goes live.

Any testing the waters communications must include specific required legends disclosing that no money is being solicited, no securities are being sold, and that an offering statement has not yet been filed. Done correctly, a testing the waters campaign can be the difference between a raise that opens strong and one that opens cold.

What Happens After a Successful Raise

Closing a Reg CF raise is not the end of your regulatory obligations. It is the beginning of an ongoing reporting relationship with your investors and the SEC.

Annual Reports on Form C-AR

Issuers must file annual reports on Form C-AR within 120 days of the end of their fiscal year. These reports must include updated financial statements and a discussion of the business’s operations and financial condition. Annual reporting continues until the issuer terminates its reporting obligations.

Terminating Reporting Obligations

Under Rule 202(b), an issuer may terminate its Reg CF reporting obligations by filing a Form C-TR if it has filed at least one annual report, has fewer than 300 holders of record, and has total assets that do not exceed $10 million. Once these conditions are met and the Form C-TR is filed, the ongoing annual reporting obligation ends.

Progress Updates on Form C-U

During the offering, if the issuer reaches 50% or 100% of its maximum offering amount, it must file a Form C-U progress update with the SEC disclosing the amount raised to date.

The Securities You Can Offer

Reg CF is flexible on security type. The most common structures used in Reg CF offerings are:

• Equity: Common or preferred shares in the company. Investors receive an ownership stake directly.
• SAFEs (Simple Agreements for Future Equity): The investor receives the right to equity in a future priced round. SAFEs are popular because they defer valuation and are relatively simple to administer. The Y Combinator post-money SAFE is widely used.
• Convertible Notes: Debt instruments that convert into equity at a future financing event, typically with an interest rate and a conversion discount or valuation cap.
• Revenue Share or Debt: Less common but permitted. Investors receive a percentage of revenue or a fixed repayment rather than equity.

The choice of security type has real implications for your cap table, future fundraising, and investor relations. Work with a securities attorney to choose the right structure for your situation.

Retail Capital Is Real Capital. Treat It That Way.

There is a version of this conversation where founders treat retail investors as a lesser category of capital. Smaller checks. Less sophisticated. Nice to have but not serious money.

That framing is wrong. And it shows up in the performance data.

The companies that raise the most through Reg CF are the ones that treat their retail investors with the same respect and strategic intention they would give to an institutional investor. They communicate consistently. They share real updates, not just the good news. They build a relationship with their investor base that extends beyond the close of the raise.

Retail investors are not just a capital source. They are customers, advocates, and amplifiers. When thousands of people have a financial stake in your success, they tell their networks. They leave reviews. They show up. That is a distribution advantage that no institutional check can replicate.

But it requires that you show up for them first. That means a communications strategy that starts before the raise opens and does not end when it closes. It means treating investor updates as a core business function, not an afterthought. It means understanding that in a direct-to-investor raise, your brand and your story are not supporting materials. They are the product.

Reg CF Works When You Treat It Like a Marketing Campaign

The founders who succeed with Reg CF consistently share one characteristic: they understand that the raise is a communications effort, not a compliance exercise.

Filing the Form C is table stakes. What actually drives a raise is the story you tell, the audience you build before launch, the content and updates you push throughout the campaign, and the investor communications infrastructure you have in place from day one.

At Momentum, we think about Reg CF through a specific formula: a founder who can tell the story with conviction, a market that is large and easy to understand, a product or company that is differentiated enough to be worth paying attention to, and a communications engine that sustains momentum from launch to close.

When those elements are in place, Reg CF is not just a way to raise money. It is a way to build a community of investors who become your most committed customers and advocates. That is a different kind of capital raise. And for the right company, it is a better one.

The Numbers Behind the Market

• Approximately 7,000 issuers have conducted roughly 8,500 Reg CF offerings since May 2016
• Total reported proceeds across all Reg CF offerings through 2024 exceed $1.3 billion
• In 2025, Wefunder led all platforms with $109 million raised under Reg CF, followed by StartEngine at $89 million, DealMaker at $66 million, and Republic at $20 million
• The overall success rate across platforms in 2025 was 67.4% of campaigns that met their minimum funding target
• Total investment crowdfunding volume combining Reg CF and Reg A+ reached $924.8 million in 2025, a 58% increase year over year

This is not a niche experiment. It is a functioning, growing capital market with real data behind it.

Ready to Go Bigger? Regulation A+ Raises the Ceiling to $75 Million

Reg CF is a powerful tool. But it has a hard cap. If your raise requires more than $5 million, or if you are a growth-stage company looking to run a larger, more institutional-grade public offering, Regulation A+ is the framework built for you.

Reg A+ allows eligible companies to raise up to $75 million directly from the public, with a broader marketing footprint, a more rigorous disclosure process, and the ability to build a genuinely large retail investor base at scale. It is the tool we work with most at Momentum, and it is where the direct-to-investor capital raising model reaches its full potential.

We cover Regulation A+ in full detail in our next article. If your ambitions are larger than $5 million, that is where to go next.

The Bottom Line

Reg CF is a legitimate, regulated, and increasingly significant path for founders who want to raise capital from the public without going through institutional gatekeepers. It has real rules, real compliance requirements, and real ongoing obligations. It also has real potential for the right company with the right story and the right communications strategy behind it.

Understanding the mechanics is the first step. The second step is being honest about whether your company is built for a retail raise. The third step is building the communications infrastructure to execute one properly.

That is where most founders need help. And that is exactly what a capital raise marketing strategy is designed to provide.

For the full text of Regulation Crowdfunding rules, see 17 CFR Part 227 and SEC Release No. 33-9974. For the 2021 amendments expanding the offering cap, see SEC Release No. 33-10884. Form C and all related filings are available through the SEC’s EDGAR system at edgar.sec.gov. This article is intended for informational purposes only. We are not attorneys. Consult qualified legal counsel before conducting any securities offering.