Reg CF fundraising and investor limits explained

The $5 million limit uses a rolling period

An issuer can raise no more than $5 million under Reg CF during a 12-month period. This is not a calendar-year allowance that resets on January 1. When planning an offer or sale, the calculation includes relevant Reg CF securities sold during the preceding 12 months and the securities in the proposed transaction. Rule 100(a)(1) establishes the limit.

For a simplified example, a company that sold $1.5 million of Reg CF securities six months ago cannot immediately add a $5 million Reg CF raise. Assuming no other relevant sales, it has $3.5 million of capacity while that earlier sale remains in the calculation. Actual offerings may involve several closing dates. Build the schedule from securities sold and the relevant dates, rather than a campaign’s headline target.

Related entities can share the same capacity

For these calculations, “issuer” includes entities controlled by the issuer, entities under common control with it, and predecessors. Control can arise through voting securities, contracts, or other power to direct management and policies. A separate incorporation or a different brand name does not necessarily create a separate $5 million allowance. Rule 100(c) defines the aggregation.

Give the offering team a group structure and prior securities-sale history. A founder with several operating companies should flag the relationships early, even if the businesses have separate customers or accounting records.

Amounts raised through other exemptions do not count toward the Reg CF dollar ceiling merely because they occurred in the same period. Separate offerings still need their own valid exemption and an analysis of how the offerings interact. The exemption comparison explains why a parallel private placement needs deliberate planning.

Accredited investors have no Reg CF investor cap

Accredited investors are not subject to Reg CF’s individual investment limits. Their investments still count toward the issuer’s $5 million aggregate limit and the offering’s disclosed maximum. An offering can also set its own investment minimum or other permitted conditions. The SEC explains the investor-limit distinction.

Accredited status is a defined legal category. It is not established by being a loyal customer, owning a business, or saying that an investor understands the risks. The onboarding process needs the information required to apply the relevant rules. Issuers should avoid promising that any particular supporter can invest an unlimited amount before that process occurs.

Non-accredited investors have a shared annual limit

Non-accredited investors face a limit across all their Reg CF investments over a rolling 12-month period, including offerings on other portals. The current calculation depends on annual income and net worth. Rule 100(a)(2) provides the formulas.

If either annual income or net worth is below $124,000, the limit is the greater of $2,500 or 5% of the greater of those two figures. If both are at least $124,000, the limit is 10% of the greater figure, subject to a $124,000 aggregate ceiling. The overall non-accredited Reg CF limit is $124,000 in any 12-month period.

For example, someone with $80,000 of annual income and $200,000 of net worth falls into the first calculation because income is below $124,000. Five percent of $200,000 is $10,000. If that investor has already invested $3,000 in another Reg CF offering during the relevant period, the remaining capacity is $7,000. This example assumes the financial figures were calculated under the applicable rules.

Investment capacity is checked through the intermediary

An issuer may rely on the intermediary’s efforts to determine investor compliance unless the issuer knows that the investment would exceed the investor’s limit. The rules also govern how income and net worth are calculated. Joint calculations with a spouse do not give each spouse a separate full allowance based on the same joint figures. See the instructions to Rule 100(a)(2).

Issuance Express operates investor onboarding and eligibility screening as part of offering operations. Direct prospective investors into that process instead of collecting informal commitments that assume a particular capacity. A supporter’s enthusiasm is useful for outreach planning, but their available investment amount may depend on other investments you cannot see.

Your target and maximum have different jobs

The minimum target is the funding threshold your offering must meet. The maximum is the most you will accept. Neither number should be confused with the statutory ceiling. Your financial statement requirement also depends on relevant prior Reg CF sales and the amount you are offering, including the maximum if you accept oversubscriptions. Rule 201(t) explains that calculation.

Build a budget for what the company can accomplish at the minimum and at higher funding levels. Issuance Express coordinates offering preparation around the proposed terms and required partners. Discuss your funding range and prior sales during the application process, then review financial statement requirements before treating the maximum as a marketing choice.