For most of the last century, buying shares in a private startup was legally off-limits to most Americans. Unless you were wealthy enough to qualify as an "accredited investor," the companies you could invest in were the ones already trading on a stock exchange — long after their fastest growth was over.
Regulation Crowdfunding, usually shortened to Reg CF, changed that. It lets a private U.S. company sell securities to anyone, through a regulated online platform, with a lighter set of rules than a full public offering.
Where it came from
Congress created the framework in Title III of the JOBS Act of 2012, and the SEC's rules took effect in May 2016. At first, companies could raise only about $1 million a year. In March 2021 the SEC raised the cap to $5 million and removed investment limits for accredited investors. That change is what turned Reg CF from a niche experiment into a real fundraising option.
How a raise works
- The company picks a platform. Every Reg CF offering must run through exactly one SEC-registered intermediary: a funding portal or a broker-dealer. The company can't sell Reg CF securities directly.
- It files a Form C. This disclosure document goes to the SEC's EDGAR database and onto the platform. It covers the business, the people running it, the financials, the risks, and the terms of the deal.
- The offering goes live. It must stay open at least 21 days. Investors commit money, which is held until the offering closes.
- The company hits its target — or doesn't. Every offering sets a minimum. If it isn't reached by the deadline, investors get their money back.
- After closing, the company keeps reporting. It files an annual report (Form C-AR) until it qualifies to stop.
The key numbers
| Company raise limit | $5,000,000 in any 12-month period |
| Non-accredited investor limit | $2,500 up to $124,000 per year across all Reg CF offerings, depending on income and net worth |
| Accredited investor limit | None |
| Minimum time open | 21 days |
| Cancellation right | Until 48 hours before the offering deadline |
| Resale restriction | Generally one year, with limited exceptions |
You can work out your own limit with our investment limit calculator.
What protects investors
Reg CF isn't the Wild West, but it isn't the stock market either. The main protections are:
- Regulated platforms. Funding portals register with the SEC and are members of FINRA. They have to run background checks on company leadership and give investors educational materials.
- Mandatory disclosure. The Form C is a legal document. Material misstatements create liability for the company.
- Investment caps. The limits stop non-accredited investors from concentrating too much of their wealth in risky deals.
- Bad-actor rules. Companies whose officers, directors, or large shareholders have certain securities violations can't use Reg CF.
- Cancellation rights. You can change your mind until two days before close, and you must reconfirm if the terms change materially.
None of these protect you from the most common outcome in startup investing: the company simply doesn't succeed. Most early-stage companies fail, and their investors lose their money. Size your investments accordingly.
What's changing
As of November 2026, the SEC is actively discussing changes to Reg CF. Its 2026 Small Business Forum recommended raising the cap from $5 million to $20 million, and SEC leadership has asked staff to look at reducing compliance burdens. Nothing has been adopted yet — the rules above are the ones in force. We'll update this guide if they change.