What it is
Regulation Crowdfunding, often called Reg CF, is an SEC exemption that allows eligible companies to raise capital from many people online. Equity raises under Reg CF must go through an SEC-registered funding portal or broker-dealer.
Regulation A, often called Reg A, is a separate SEC exemption sometimes described as a smaller public offering. It generally involves a more detailed filing and review process with the SEC than Reg CF does.
Both exist to widen the ways businesses can raise money, but they differ in structure, disclosure, review, cost and who can participate. Rules and limits change, so always check the SEC's current guidance and speak with a securities attorney. Investing in any private or early-stage company is risky and illiquid.
How it’s traditionally been approached
Traditionally, many small companies relied on friends, family, banks or private investors. Exemptions like Reg CF and Reg A were created to give businesses additional paths to reach a wider community of supporters.
Founders have often looked at Reg CF when they want a community-driven, online-first approach with a lighter process. They have often looked at Reg A when they are considering a larger or more formal offering with additional paperwork and SEC review.
Neither path is right for everyone. Other exemptions, donation-based or rewards-based crowdfunding, and conventional financing are also part of the picture, and each has its own tradeoffs.
How the right fundraising pro may help
The right independent fundraising pro may help you understand how these exemptions compare, what each generally requires, and which questions to bring to a securities attorney. They may also help you think through timelines, disclosures and how to communicate with your community honestly.
A first conversation is often a discovery call. Expect questions about your business stage, goals, audience and readiness. Helpful questions to ask include: What experience do you have with these exemptions? What does the process look like step by step? What will I need to prepare? What is outside your scope and needs a lawyer?
You may also want to ask how they handle truthful, specific messaging and how they work within each portal's and payment processor's terms. A good pro may be upfront that no one can promise a raise will succeed. For tax questions, a tax and accounting professional is the right resource.
The bigger picture
Choosing how to raise money is not only a financial decision. It can affect your stress, your relationships with supporters, and your confidence in the road ahead. Taking time to learn the differences may bring more peace of mind than rushing into a path that does not fit.
Lean on trusted people, whether family, faith community, mentors or advisors, as you decide. If the pressure of fundraising feels heavy, caring for your own wellbeing is part of running a healthy business, and Providers.plus may be a helpful place to find supportive resources.
Keep in mind
- This page is educational only and is not legal, tax, accounting or investment advice, and it is not an offer or solicitation of any security.
- Equity raises must go through an SEC-registered funding portal or broker-dealer, and investing is risky and illiquid.
- Rules and limits change, so confirm current requirements with the SEC and a securities attorney rather than relying on this page.
- Be truthful and specific about how funds will be used; misusing money raised can be fraud. Ask a tax professional how any funds may be treated.
Not sure where to start? Answer a few gentle questions and choose who you’d like to hear from.
Start a fundraiser →Frequently asked questions
What is the main difference between Reg CF and Reg A?
Reg CF and Reg A are two separate SEC exemptions with different structures, disclosures and review processes. Reg CF is generally a more streamlined, online-focused path, while Reg A is generally more formal and involves more SEC filing and review. Confirm current details with the SEC and a securities attorney.
Is Reg CF easier than Reg A?
Reg CF is often described as lighter in process, but easier does not mean simple or risk-free. Both require careful disclosure, accurate statements and compliance with SEC rules. A securities attorney can explain what applies to your situation.
Do I need a funding portal for Reg CF?
Yes, equity raises under Reg CF must go through an SEC-registered funding portal or broker-dealer. You cannot simply run an equity raise on your own website. A securities attorney can explain the requirements.
Can anyone invest in Reg CF or Reg A offerings?
Rules on who can participate and how much can be invested are set by the SEC and can change. This page does not quote limits, so check current SEC guidance. Investing is risky and illiquid, and this page does not recommend any investment.
How can a fundraising pro help with reg cf vs reg a decisions?
A fundraising pro may help you understand the general differences, organize your materials and plan honest communication with your community. They do not replace a securities attorney, and no one can guarantee a raise will succeed.
Are funds raised through crowdfunding taxable?
It depends on the facts, including how the money is raised and structured. Ask a qualified tax professional about your situation rather than assuming any outcome. This page is not tax advice.
Educational resource. 2A Crowd shares general information and connects people with independent fundraising pros. It is not professional advice. Talk with a qualified professional about your own situation.