Reg D vs Reg A vs Reg CF: Comparing SEC Exemptions

The SEC Exemption Framework

The Securities Act of 1933 requires every offer and sale of securities to be registered with the SEC—unless an exemption applies. Registration is expensive, time-consuming, and disclosure-heavy. Congress recognized that not every capital raise needs that level of regulatory oversight, so the SEC developed several exemption frameworks that allow companies, funds, and SPVs to raise capital without full registration.

The three most important frameworks are Regulation D, Regulation A, and Regulation Crowdfunding (Reg CF). Each targets a different segment of the market, with distinct trade-offs around raise limits, investor eligibility, disclosure requirements, and cost. Understanding these differences is essential for any issuer deciding how to structure a capital raise.

Regulation D Overview

Regulation D is the dominant exemption framework for private capital formation in the United States. In 2024, issuers raised more than $2.7 trillion under Reg D—far exceeding the capital raised through public offerings, Reg A, and Reg CF combined. Reg D includes three rules: Rule 504 (up to $10 million), Rule 506(b) (unlimited, no general solicitation), and Rule 506(c) (unlimited, general solicitation permitted).

Reg D is the preferred path for venture capital funds, private equity, real estate syndications, SPVs, and startup fundraising because of its speed, flexibility, and lack of a dollar cap under Rule 506.

Key Features of Reg D

• Raise limit: No cap under Rule 506; up to $10 million under Rule 504.
• Investor eligibility: Rule 506(c) requires all investors to be verified accredited investors. Rule 506(b) allows up to 35 sophisticated non-accredited investors alongside unlimited accredited investors.
• SEC filing: A brief Form D notice filing within 15 days of the first sale. No SEC review or qualification required.
• General solicitation: Prohibited under 506(b); permitted under 506(c).
• Ongoing reporting: None required at the federal level.
• Resale restrictions: Securities are “restricted” and cannot be freely resold without registration or another exemption (typically Rule 144 after a holding period).
• State preemption: Rule 506 offerings preempt state blue sky registration. Rule 504 does not.
• Cost and timeline: Lowest upfront cost and fastest time-to-market of the three frameworks. Many Reg D offerings launch within weeks.

For a deeper look at how Rule 506(b) and 506(c) differ, see our Regulation D guide. For the mechanics of Form D filing, see What Is Form D?.

Regulation A / A+ Overview

Regulation A—substantially updated by Title IV of the JOBS Act in 2015 and now commonly called “Reg A+”—provides a scaled-down path to offering securities to the general public. It sits between a full SEC registration and a private Reg D offering, offering broader investor access at the cost of heavier compliance.

Reg A allows companies to raise capital from both accredited and non-accredited investors and permits general solicitation. Securities sold under Reg A are freely tradable—a major advantage over Reg D’s restricted securities. However, issuers must file an offering statement (Form 1-A) with the SEC and undergo a qualification process before sales can begin.

Tier 1 vs Tier 2

Regulation A is divided into two tiers with different caps and requirements:

• Tier 1: Raises up to $20 million in a 12-month period. Offerings must comply with state blue sky laws in each state where securities are sold. No ongoing SEC reporting is required after the offering, but the compliance cost of multi-state registration can be significant.
• Tier 2: Raises up to $75 million in a 12-month period. Tier 2 offerings preempt state registration requirements (similar to Rule 506), but the issuer must file ongoing reports with the SEC, including annual audited financial statements (Form 1-K), semi-annual reports (Form 1-SA), and current event reports (Form 1-U). Non-accredited investors in Tier 2 offerings are limited to investing no more than 10% of their annual income or net worth (whichever is greater).

The SEC qualification process for Reg A typically takes 3 to 6 months, and the legal, accounting, and filing costs can range from $50,000 to $150,000 or more. This makes Reg A impractical for smaller raises but attractive for companies that want broad public access and freely tradable securities without a full IPO.

Regulation Crowdfunding (CF) Overview

Regulation Crowdfunding (Reg CF), enacted under Title III of the JOBS Act and effective since May 2016, allows companies to raise capital from the general public—including non-accredited investors—through SEC-registered online funding portals or broker-dealers. It was designed to democratize access to startup investing by lowering the barriers for both issuers and investors.

Key Features of Reg CF

• Raise limit: Up to $5 million in a 12-month period.
• Investor eligibility: Open to all investors, including non-accredited. Individual investment limits apply based on annual income and net worth: investors with income or net worth below $124,000 can invest the greater of $2,500 or 5% of the lesser of their income or net worth; investors with both income and net worth at or above $124,000 can invest up to 10% of the lesser, capped at $124,000 per year across all Reg CF offerings.
• Platform requirement: All offerings must be conducted through an SEC-registered funding portal or broker-dealer. The issuer cannot sell directly.
• SEC filing: Issuers file Form C with the SEC, which includes business description, financial statements, use of proceeds, and risk factors.
• Financial statement requirements: Raises up to $124,000 require financial statements certified by the CEO. Raises between $124,000 and $618,000 require reviewed financial statements. Raises above $618,000 require audited financial statements.
• Ongoing reporting: Annual reports on Form C-AR are required.
• General solicitation: Permitted, but all transactions must occur on the registered platform.
• Resale restrictions: Securities generally cannot be resold for one year, with limited exceptions (transfers to family members, accredited investors, or in registered offerings).

Reg CF is best suited for consumer-facing startups and small businesses that can leverage community support and social media marketing to attract a large number of small investors.

Side-by-Side Comparison

The following table compares the three SEC exemption frameworks across key dimensions:

Dimension	Regulation D (Rule 506)	Regulation A (Tier 2)	Regulation CF
Maximum raise	Unlimited	$75 million (12 months)	$5 million (12 months)
Investor eligibility	Accredited only (506(c)) or up to 35 non-accredited (506(b))	All investors (10% income/net worth cap for non-accredited)	All investors (individual limits apply)
General solicitation	Permitted under 506(c); prohibited under 506(b)	Permitted	Permitted (through registered portal)
SEC filing	Form D (notice filing, no review)	Form 1-A (SEC qualification required)	Form C (filed with SEC)
SEC review period	None	3–6 months typical	Offering goes live after filing (21-day cooling period)
Ongoing reporting	None	Annual, semi-annual, and current reports	Annual report (Form C-AR)
Securities tradability	Restricted (Rule 144 holding period)	Freely tradable	Restricted for 1 year
State preemption	Yes (Rule 506)	Yes (Tier 2); No (Tier 1)	Yes
Typical cost	$5,000–$30,000	$50,000–$150,000+	$10,000–$50,000 (plus portal fees)
Time to launch	2–4 weeks	3–6 months	4–8 weeks
Best suited for	Funds, SPVs, startups, private placements	Growth-stage companies seeking public-like access	Consumer startups, community-driven raises

Choosing the Right Exemption

The right exemption depends on your specific circumstances. Here is a practical decision framework:

• Choose Reg D if you are raising capital from accredited investors or a small group of sophisticated investors, want to launch quickly with minimal regulatory overhead, do not need freely tradable securities, and your raise has no dollar cap requirement. Reg D is the standard choice for fund managers, SPV sponsors, and startup founders running private placements.
• Choose Reg A if you want to raise from the general public (including non-accredited investors) at scale, need freely tradable securities (potentially listing on an exchange like OTCQX or Nasdaq), and can absorb the upfront cost and time of SEC qualification. Reg A is sometimes called a “mini-IPO” because it provides many of the benefits of going public without the full burden of an S-1 registration.
• Choose Reg CF if your raise is under $5 million, your product or brand has strong consumer appeal that can drive a grassroots campaign, you want to tap into a large number of small investors, and you are comfortable conducting the offering through a registered funding portal.

Many issuers also combine exemptions. For example, a company might run a Reg CF campaign to build community and brand awareness while simultaneously raising from institutional and accredited investors under Reg D. The SEC permits concurrent offerings under different exemptions, though coordination requires careful legal structuring.

Practical Considerations

Beyond the regulatory differences, several practical factors should inform your decision:

• Legal costs: Reg D offerings are the cheapest to set up. A straightforward 506(b) offering might cost $5,000–$15,000 in legal fees. Reg A offerings typically require $50,000–$150,000 in legal and accounting fees before the first dollar is raised. Reg CF falls in between, with portal fees adding to the total.
• Investor management: Reg CF and Reg A offerings often result in large numbers of small investors—hundreds or even thousands. Managing communications, cap table updates, and tax reporting (K-1s or 1099s) for that many investors creates ongoing operational burden.
• Speed: If time is a factor, Reg D wins. You can go from entity formation to first close in weeks. Reg A’s SEC qualification process alone can take months.
• Liquidity: If your investors need or expect liquidity, Reg A’s freely tradable securities are a significant advantage. Reg D and Reg CF securities are restricted, and secondary market options are limited.
• Marketing reach: Both Reg A and Reg CF allow broad public marketing. Under Reg D, only 506(c) permits general solicitation, and even then all purchasers must be verified accredited investors.

For most fund managers and SPV sponsors, Reg D remains the right choice because of its speed, low cost, and unlimited raise capacity. SPV Flow provides the tools to search, analyze, and track Reg D offerings filed with the SEC—giving you real-time visibility into the private capital markets.

Frequently Asked Questions