While both Regulation Crowdfunding (Reg CF) and Regulation A+ (Reg A+) allow startups to raise money from the public, they are essentially different “tiers” of fundraising. You can think of Reg CF as the “entry-level” option for startups and Reg A+ as a “mini-IPO” for more established companies.
Here is the breakdown of the differences and how you can participate as an investor.
1. Can anyone invest?
Yes. Both regulations were designed to “democratize” investing, meaning you do not need to be an “accredited investor” (someone with a high net worth or high income) to participate.
- Reg CF: Open to everyone, but there are limits on how much you can invest annually based on your income and net worth.
- Reg A+: Open to everyone. If you are not an accredited investor, you are generally limited to investing no more than 10% of the greater of your annual income or net worth per offering (specifically for Tier 2 offerings).
2. The Differences at a Glance
| Feature | Regulation Crowdfunding (Reg CF) | Regulation A+ (Reg A+) |
|---|---|---|
| Max Raise | Up to $5 million per year. | Up to $75 million per year. |
| Company Stage | Usually early-stage startups. | More mature, “growth-stage” companies. |
| SEC Scrutiny | Moderate; requires a “Form C” filing. | High; requires a formal “Offering Circular” qualified by the SEC. |
| Audit Needs | Required for raises over $1.24M. | Always required (audited financials). |
| Liquidity | Shares are usually locked for 1 year. | Shares are typically immediately tradable (liquid). |
3. Do you need a “Portal”?
This is a key technical difference:
- For Reg CF: Yes. By law, a company cannot sell Reg CF shares directly to you on their own website. They must use an SEC-registered intermediary, which is either a Funding Portal (like Republic, Wefunder, or StartEngine) or a registered Broker-Dealer.
- For Reg A+: No, but often yes. Companies are allowed to host Reg A+ offerings on their own website (a “self-hosted” offering) as long as they follow strict SEC guidelines. However, most companies still choose to use a portal or a platform to handle the heavy lifting of payments, investor verification, and marketing.
Summary for the Investor
If you are looking to invest, you will find most Reg CF opportunities on popular crowdfunding sites. For Reg A+, you might see them on those same sites, but you might also see an ad for a company (like a real estate fund or a tech startup) directing you to a dedicated investment page on their own site.
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