Reg CF Can Raise $5M—but the Offering Needs One Registered Intermediary

An eligible U.S. startup can raise up to $5 million under Regulation Crowdfunding in a 12-month period without registering the offering under the Securities Act. But it cannot host the transaction itself or divide it among platforms: the offering must run through one registered intermediary, with public disclosures filed before securities are sold.

The founder-facing launch sequence is to confirm eligibility and remaining offering capacity, verify an intermediary, prepare Form C and the financial statements, control pre- and post-filing communications, and schedule continuing reports. Management remains responsible for the company information supplied to investors, while securities counsel and an independent accountant should resolve the legal and financial-reporting requirements that depend on the issuer’s circumstances.

1. Confirm that the issuer and offering qualify

Begin with the company’s status and fundraising history. The SEC’s issuer guidance confirms that the $5 million ceiling includes Reg CF securities already sold during the preceding 12 months, relevant sales by predecessors or entities under common control, and the contemplated sale. Capital raised through other exemptions is not included in that specific calculation.

Reg CF is unavailable to non-U.S. companies, Exchange Act reporting companies, certain investment companies, companies covered by the bad-actor disqualification rules, and issuers with no specific business plan or a plan to merge with an unidentified company. A previous Reg CF issuer is also ineligible if it failed to comply with required annual reporting during the two years before filing its new offering statement.

Review organizational records, earlier Reg CF sales, reporting history, and possible disqualifying events involving the issuer and covered persons. Those persons include directors, officers, promoters, compensated solicitors, and beneficial owners holding at least 20% of the issuer’s voting equity.

Investor limits are separate from the issuer’s ceiling. Accredited investors have no Reg CF-specific cap; a non-accredited investor’s aggregate purchases across all Reg CF offerings during a 12-month period are limited by annual income and net worth. Depending on those figures, the calculation is generally the greater of $2,500 or 5% of the greater figure, or 10% of the greater figure, subject to a $124,000 maximum.

2. Engage and verify one intermediary

The transaction must be conducted exclusively through the online platform of one SEC-registered broker-dealer or funding portal that is also a FINRA member. FINRA’s funding-portal materials explain the registration framework and provide its list of regulated funding portals; broker-dealers can be checked through FINRA’s separate firm records.

Select the intermediary before locking the launch date. Its onboarding review, document format, investor flow, payment arrangements, communication channels, fees, and procedures for cancelling or reconfirming commitments will shape the schedule.

The intermediary may monitor an investor’s aggregate limit, and the issuer may generally rely on that work unless it knows the purchase would exceed the limit. The intermediary’s role does not shift responsibility for the offering statement: the company must ensure that its disclosures are complete, accurate, and not misleading.

3. Build Form C and the financial package

Before the offering starts, the issuer must file Form C through EDGAR and provide it to investors and the intermediary. The filing covers the business, intended use of proceeds, officers, directors and 20% owners, related-party transactions, financial condition, capital structure, offering price or pricing method, target amount, deadline, oversubscriptions, and material risks.

The codified Regulation Crowdfunding rules set financial-statement requirements according to the amount offered and sold under Reg CF during the relevant 12-month period. At $124,000 or less, the issuer generally provides specified tax-return information and financial statements certified by its principal executive officer unless independently reviewed or audited statements are available. Above $124,000 and through $618,000, independent review is generally required.

Above $618,000, a first-time Reg CF issuer offering no more than $1.235 million may generally use independently reviewed statements. A first-time issuer offering more than $1.235 million, or an issuer that has previously sold securities under Reg CF, generally needs independently audited statements.

Set the intended maximum, not merely the target, before commissioning the accounting work. Prior Reg CF sales can change the applicable tier, and an assurance engagement may become the longest item in the launch schedule.

4. Separate testing the waters from the live offering

Before filing Form C, the issuer may communicate orally or in writing to assess investor interest. It may not solicit or accept money, purchase commitments, or even non-binding commitments at that stage.

The communication must state that no money is being solicited or accepted, no offer to buy can be accepted until the offering statement is filed and then only through an intermediary’s platform, and an indication of interest creates no obligation. Written testing-the-waters materials must be included with Form C, so retain every approved version and the channels in which it appeared.

Once Form C is filed, an off-platform notice may direct readers to the intermediary and include only the permitted offering terms and limited factual information about the issuer. Fuller discussion belongs in the intermediary’s communication channels, where the issuer must identify itself and anyone speaking for it must disclose that affiliation. Social posts, emails, interviews, and compensated promotion should therefore follow one reviewed communications plan.

5. Calendar amendments and continuing reports

Form C is the beginning of the disclosure cycle. A material change while the offering remains open requires Form C/A, and outstanding investors generally have five business days to reconfirm their commitments. Progress updates ordinarily require Form C-U after the issuer reaches 50% and 100% of its target and after the final amount is known, although frequent platform updates may remove the need for the two interim filings.

After securities are sold, the issuer generally must file Form C-AR within 120 days after each fiscal year-end and post it on its website. Reporting continues until a specified termination condition is met; an eligible issuer ends the obligation by filing Form C-TR.

Before launch, assign responsibility for amendments, progress data, accountant lead time, the annual filing, website publication, and the termination review. Missing required annual reports can prevent the company from using Reg CF again, making post-close compliance part of the financing decision rather than an administrative afterthought.

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