Reg A vs Reg D vs Reg CF: Exemptions Compared

The three exemptions at a glance

Most private capital in the U.S. is raised under one of these three exemptions from SEC registration. Choosing between them is a trade-off between how much you can raise, who is allowed to invest, and how much ongoing disclosure you take on.

	Regulation D (Rule 506)	Regulation A	Regulation CF
Raise limit (12 months)	No limit	Tier 1: $20M; Tier 2: $75M	$5M
Who can invest	Accredited investors (506(c)); accredited plus up to 35 sophisticated non-accredited (506(b))	General public, accredited and non-accredited	General public, accredited and non-accredited
Advertising	Allowed under 506(c); not under 506(b)	Allowed	Allowed, through a registered funding portal
Accredited verification	Required under 506(c); not under 506(b)	Not required	Not required
Investor limits	None on accredited investors	Tier 2 non-accredited: 10% of greater of income or net worth	Per-investor limits based on income and net worth
Typical use	Syndications, private funds, private placements	Larger public-facing raises, "mini-IPO" style	Early-stage, community, and online raises

Regulation D - the private-placement workhorse

Regulation D's Rule 506 is how the large majority of private capital is raised. There is no cap on the amount, and it comes in two versions. 506(b) cannot advertise and lets investors self-certify; 506(c) can advertise publicly but requires the issuer to take reasonable steps to verify every investor is accredited. If you are marketing your raise openly, you are in 506(c), and verification is the price of admission. That is the exemption AccreditedNow is built around.

Regulation A - the public-facing raise

Regulation A (sometimes called a "mini-IPO") lets a company raise from the general public, including non-accredited investors, without a full registration. There are two tiers: Tier 1 up to $20 million and Tier 2 up to $75 million in a 12-month period. Tier 2 comes with audited financials and ongoing reporting, and a non-accredited individual is generally capped at investing 10% of the greater of their annual income or net worth. There is no accredited-verification step - the investor limits do that work instead.

Regulation Crowdfunding - the smaller, open raise

Regulation Crowdfunding (Reg CF) is built for smaller raises - up to $5 million in a 12-month period - conducted online through an SEC-registered funding portal or broker-dealer. It is open to everyone, and instead of verifying accredited status it caps how much each investor can put in across all crowdfunding offerings in a year, based on their income and net worth. No CPA letter is required.

So which one needs a verification letter?

Only Rule 506(c). If a sponsor is advertising a deal and asking investors to prove accredited status, they are in 506(c) and every investor needs third-party verification. Reg A and Reg CF substitute investor caps for verification and allow non-accredited investors outright. If you are a 506(c) sponsor, the cleanest way to handle verification at scale is prepaid seat packs so your investors verify at no cost to them; if you are an investor who has been asked to verify, start with verifying for a platform.

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Common questions

What is the difference between Reg A, Reg D, and Reg CF?

All three are exemptions that let a company raise capital without a full SEC registration, but they differ in size and audience. Regulation D (Rule 506) has no dollar cap and is for private placements, mostly to accredited investors. Regulation A lets a company raise up to $20 million (Tier 1) or $75 million (Tier 2) in a 12-month period from the general public, including non-accredited investors. Regulation Crowdfunding caps a raise at $5 million in a 12-month period and is built for smaller online raises open to everyone.

Which exemption requires accredited investor verification?

Rule 506(c) under Regulation D is the one that requires the issuer to take reasonable steps to verify each investor is accredited, because it permits general advertising. Rule 506(b) does not require third-party verification but prohibits advertising. Regulation A and Regulation Crowdfunding do not require accredited verification at all - they allow non-accredited investors, subject to investment limits rather than a verification step.

Can non-accredited investors participate in Reg A or Reg CF?

Yes. Both Regulation A and Regulation Crowdfunding are open to non-accredited investors, which is a key reason issuers choose them. In a Regulation A Tier 2 offering, a non-accredited individual is generally limited to investing no more than 10% of the greater of their annual income or net worth. Regulation Crowdfunding also caps how much each investor can put in across all crowdfunding deals in a 12-month period, based on income and net worth.

How much can a company raise under each exemption?

Regulation D Rule 506 has no dollar limit. Regulation A allows up to $20 million in a 12-month period under Tier 1 and up to $75 million under Tier 2. Regulation Crowdfunding allows a maximum of $5 million in a 12-month period. The trade-off is that the larger, cap-free exemptions come with tighter investor eligibility, while the smaller ones open the raise to everyone with more ongoing disclosure.

This page is general educational information about federal exempt-offering rules, not legal advice. Each exemption has conditions beyond this summary - Form D or Form 1-A/Form C filings, financial-statement and disclosure requirements, bad-actor disqualification, and state-law considerations. Confirm how they apply to your offering with your securities counsel. AccreditedNow is not a law firm.