Every capital raise in the United States — unless it involves a fully registered public offering — relies on an exemption from SEC registration. That exemption determines who can invest, how much you can raise, how you can market the offering, and what ongoing disclosure you owe to investors. Choose the wrong one and you've either locked out the investors you want, triggered compliance obligations you can't sustain, or — in the worst case — conducted an unregistered offering of securities with no valid exemption.

There are four exemptions that fund managers, startup founders, and syndicate leads encounter most often: Regulation D, Regulation S, Regulation A+, and Regulation CF. They are not interchangeable, and they are not a menu where you pick the most convenient option. Each was designed for a specific type of raise, a specific investor population, and a specific stage of company or fund. This guide maps each exemption to its mechanics, requirements, limitations, and the situations where it fits — and where it doesn't.

The Baseline: Why Exemptions Exist

The Securities Act of 1933 requires that any offer or sale of securities either be registered with the SEC or qualify for an exemption. Registration is expensive ($500K–$2M+ in legal, accounting, and underwriting costs), time-consuming (6–18 months), and subject to ongoing public reporting requirements. For private companies, startups, and private fund managers, registration is almost never the right path.

Exemptions allow issuers to raise capital from private markets without the full registration process — in exchange for constraints on who can invest, how much can be raised, and how the offering can be marketed. Understanding which constraints apply to which exemption is the core of private capital markets compliance.

Regulation D: The Institutional and Accredited Investor Standard

Regulation D is the most widely used securities exemption in the United States. In 2023, issuers raised over $4 trillion through Regulation D offerings — dwarfing the amount raised through registered public offerings. It is the foundational exemption for private equity funds, venture capital funds, hedge funds, SPVs, and most startup equity rounds above seed stage.

Rule 506(b): The Default Private Offering

Rule 506(b) allows an issuer to raise an unlimited amount of capital from:

• Up to 35 non-accredited but sophisticated investors

• An unlimited number of accredited investors

The offering cannot involve general solicitation or advertising. The issuer must have a substantive pre-existing relationship with investors before making an offer, and non-accredited sophisticated investors must receive the same level of disclosure as would be required in a registered offering — which in practice means most issuers exclude non-accredited investors entirely to avoid the disclosure burden.

Key features:

• No cap on raise amount

• No general solicitation (no public advertising, no social media posts pitching the deal to strangers)

• Form D must be filed with the SEC within 15 days of first sale

• State "Blue Sky" preemption: 506(b) offerings are exempt from state securities registration

Rule 506(c): General Solicitation for Accredited Investors Only

Rule 506(c) — added by the JOBS Act in 2013 — allows issuers to publicly advertise their offering, including on social media, at conferences, and through public marketing channels, provided all investors are verified accredited investors.

The critical distinction from 506(b): under 506(c), issuers must take reasonable steps to verify accredited investor status — self-certification alone is not sufficient. Acceptable verification methods include:

• Review of tax returns for the income test

• Review of bank statements, brokerage statements, or CPA letters for the net worth test

• Written confirmation from a licensed CPA, attorney, registered investment adviser, or broker-dealer

Key features:

• No cap on raise amount

• General solicitation is permitted

• All investors must be verified accredited investors

• Stricter verification standard than 506(b)

• Form D filed within 15 days of first sale

When to use 506(c): Managers running publicly visible SPV campaigns, operators who post deal flow on X or LinkedIn, or any GP who wants to publicly market a fund raise without restrictions on who sees the pitch.

Rule 504: Small Raises for Non-Accredited Investors

Rule 504 allows raises of up to $10 million in a 12-month period from any investors — accredited or not — with limited restrictions on general solicitation in certain circumstances. It's primarily used by early-stage companies raising small amounts from friends, family, and community investors. It does not preempt state Blue Sky laws, making compliance more complex. Fund managers and established issuers rarely use Rule 504.

Reg D and Private Funds

For private fund managers, Regulation D — almost always Rule 506(b) or 506(c) — is the standard operating exemption. It works in combination with the 3(c)(1) or 3(c)(7) exemptions under the Investment Company Act discussed separately: Reg D governs how the fund can offer and sell its interests; 3(c)(1)/3(c)(7) governs whether the fund itself must register as an investment company.

FinCEN's January 2026 AML/KYC rules require investment advisers conducting Reg D offerings to implement Customer Due Diligence programs — meaning the verification requirements that once felt optional now have regulatory teeth. Platforms like Allocations build this verification into the subscription workflow automatically.

Regulation S: The Offshore Safe Harbor

Regulation S is not an exemption for domestic US offerings — it is a safe harbor that allows issuers to sell securities outside the United States to non-US persons without SEC registration, on the theory that the SEC's jurisdiction doesn't extend to purely offshore transactions.

The Two Core Conditions

Regulation S applies when:

1. The offer and sale occur in an "offshore transaction": The offer is not made to a person in the United States, and either the buyer is outside the US at the time of sale or the transaction is executed on an established foreign exchange

2. No directed selling efforts in the United States: The issuer and its affiliates make no marketing efforts targeting US persons — no US-targeted advertising, no US road shows, no pitching to US investors for that offering

Category 1, 2, and 3

Regulation S has three categories based on the "US market interest" in the issuer:

Category 1: Foreign issuers with no substantial US market interest. No additional restrictions beyond the two core conditions. The most permissive category — primarily for foreign government securities and foreign issuers whose securities are not of interest to US investors.

Category 2: US issuers and foreign issuers with substantial US market interest offering equity securities. Requires a 40-day "distribution compliance period" during which the securities cannot be resold to US persons. Debt securities from these issuers require a 40-day period as well.

Category 3: US issuers offering equity securities. Requires a one-year distribution compliance period before resale to US persons. The most restrictive category — applies to US startups and fund managers raising from non-US investors offshore.

Reg S and Fund Managers

For Cayman-domiciled funds raising primarily from non-US LPs, Regulation S is the applicable exemption for the offshore offering. The fund's Cayman ELP interests are offered offshore to non-US persons under Reg S, while a parallel US feeder fund offers interests to US accredited investors under Reg D.

Reg S cannot be used as a workaround to sell to US investors offshore — if there is coordinated selling effort that reaches US persons, or if US persons purchase through offshore accounts, the safe harbor is lost and the offering may be deemed an unregistered domestic offering.

Combining Reg D and Reg S

The most common institutional fund structure combines both:

• Reg S: Governs the offering to non-US LPs in the Cayman offshore fund

• Reg D (506(b) or 506(c)): Governs the offering to US accredited investors in the Delaware feeder or US-domiciled vehicle

This parallel structure allows a single manager to raise from a global LP base while maintaining compliance with both US and offshore requirements. Integration rules between Reg D and Reg S offerings are generally favorable — the SEC has provided guidance that bona fide offshore Reg S offerings do not integrate with concurrent domestic Reg D offerings.

Regulation A+: The Mini-IPO

Regulation A+ — modernized by the JOBS Act and expanded by the SEC in 2015 — is sometimes called a "mini-IPO." It allows issuers to raise capital from both accredited and non-accredited investors through a public offering process that is lighter than a full S-1 registration but heavier than Regulation D.

Tier 1 vs. Tier 2

Tier 1: Up to $20 million in a 12-month period. No ongoing reporting requirements after the offering. Subject to state Blue Sky laws. Rarely used because state compliance adds significant cost and complexity.

Tier 2: Up to $75 million in a 12-month period ($75M cap for all securities; non-accredited investors limited to 10% of their annual income or net worth per offering). Requires:

• Audited financial statements

• Ongoing annual, semi-annual, and current event reporting to the SEC (Form 1-K, 1-SA, 1-U)

• SEC qualification of the offering circular before sales begin (analogous to a prospectus review)

• Blue Sky preemption (no state registration required)

Non-accredited investors in Tier 2 offerings are limited to investing the greater of 10% of their annual income or 10% of their net worth in any 12-month period across all Reg A+ offerings.

Where Reg A+ Fits (and Where It Doesn't)

Regulation A+ is designed for operating companies raising growth capital from retail investors — not for private fund managers. The ongoing reporting requirements (annual audits, semi-annual reports to the SEC) are cost-prohibitive for most funds and create disclosure obligations that conflict with standard fund confidentiality practices.

Private fund managers almost never use Reg A+. The exemption is more commonly used by:

• Consumer-facing startups building a community of retail investors

• Real estate companies offering fractional ownership to the public

• Companies that want broad retail distribution without a full IPO

If you're a fund manager and someone is suggesting Reg A+ as your fundraising vehicle, that's a strong signal they don't understand your use case.

Practical Costs

Reg A+ Tier 2 compliance costs typically range from $50,000 to $200,000 for initial offering preparation (legal, audit, SEC qualification) plus $20,000–$75,000 annually for ongoing reporting. These costs are manageable for companies raising $20M+, but prohibitive for smaller raises where Reg CF or Reg D is more appropriate.

Regulation CF: Equity Crowdfunding

Regulation CF — also known as Regulation Crowdfunding — was introduced by the JOBS Act and became effective in 2016. It allows companies to raise capital from any investor, including non-accredited investors, through SEC-registered online crowdfunding platforms, up to $5 million in a 12-month period.

How Reg CF Works

Unlike Reg D (direct to investors) or Reg A+ (company-led public offering), Reg CF requires the offering to be conducted exclusively through a single SEC-registered intermediary — either a broker-dealer or a funding portal registered with FINRA. The issuer cannot sell directly; all transactions flow through the platform.

Investor limits per 12-month period (across all Reg CF offerings):

• If annual income or net worth is less than $124,000: The greater of $2,500 or 5% of the lesser of annual income or net worth

• If both annual income and net worth are $124,000 or more: 10% of the lesser of annual income or net worth, up to a maximum of $124,000

Accredited investors have no investment limit under Reg CF.

Disclosure Requirements

Issuers conducting Reg CF offerings must file a Form C with the SEC disclosing:

• Business description, use of proceeds, and financial condition

• Officers, directors, and major shareholders

• Financial statements (reviewed by an independent accountant for raises above $124,000; audited for raises above $1.235M or for issuers with prior Reg CF raises)

• Material risks and offering terms

Form C must be filed before the offering begins and updated at close (Form C-U).

Ongoing Reporting

Reg CF issuers must file an annual report (Form C-AR) as long as they have securities outstanding and more than 300 holders of record, until the company registers a class of securities, files for an IPO, or has raised $5M or less total and had its securities held by fewer than 300 persons for at least three years.

Where Reg CF Fits

Regulation CF is designed for early-stage companies raising small amounts from community investors, customers, or fans — not for fund managers. A private equity or venture fund cannot use Reg CF because:

• The $5M annual cap is insufficient for most meaningful fund raises

• The mandatory intermediary requirement conflicts with how fund subscriptions are processed

• The ongoing reporting obligations and Form C disclosures are incompatible with standard fund confidentiality

Reg CF is most useful for consumer product companies, fintech startups, and community-driven businesses that want to raise from their user base. Republic, Wefunder, and StartEngine are the major platforms.

Full Comparison Table

Choosing the Right Exemption: Decision Framework

Are you a private fund manager (PE, VC, hedge fund, SPV)? → Reg D 506(b) or 506(c) is your exemption. Use 506(b) for relationship-based fundraising; use 506(c) if you're publicly marketing the raise. Layer Reg S for non-US LP capital in a Cayman vehicle.

Do you want to publicly post deal flow on social media or market openly? → Reg D 506(c) only. You cannot general-solicit under 506(b). Every investor must be verified accredited — not self-certified.

Are you raising from non-US investors for a Cayman-domiciled fund? → Regulation S for the offshore offering, combined with Reg D for any US feeder.

Are you an operating company raising growth capital from retail investors? → Reg A+ Tier 2 if you need more than $5M. Reg CF if you need $5M or less and want a platform-driven process. Understand the ongoing reporting costs before committing.

Are you a startup raising from your customer community? → Reg CF through a registered platform. Budget for Form C preparation and ongoing annual reporting obligations.

Are you mixing US and non-US investors in the same raise? → Structure two parallel offerings: Reg D for US accredited investors, Reg S for non-US persons. Do not treat them as one offering.

2026 Regulatory Updates

FinCEN AML/KYC (January 2026): Investment advisers conducting Reg D offerings must implement formal Customer Due Diligence programs. Under 506(c), documented accredited investor verification was already required — the FinCEN rules add the broader CDD layer on top. Practically, this means KYC workflows for Reg D offerings now have a regulatory mandate beyond just SEC compliance.

SEC Rule 506(c) verification safe harbors: The SEC proposed updates in 2023 to modernize 506(c) verification methods, including allowing use of third-party accreditation verification services and expanding the methods for verifying net worth. Check current SEC guidance for the status of any finalized amendments.

Reg CF annual limit: The $5M annual cap under Reg CF was increased from $1.07M to $5M by the SEC's 2021 Regulation Crowdfunding amendments. No further increases have been enacted through 2026.

Reg A+ Tier 2 limit: The $75M cap was raised from $50M in 2021. No further increases through 2026.

Where Allocations Fits In

Allocations is purpose-built for Reg D — the exemption that governs virtually every SPV and private fund on the platform. For GPs conducting 506(b) or 506(c) offerings:

• 506(b) workflows: Relationship-based onboarding with accredited investor self-certification, KYC verification, and subscription document management

• 506(c) workflows: Documented accredited investor verification built into the subscription process — IDs, income documentation, net worth review — satisfying the "reasonable steps to verify" standard

• Form D support: Guidance on Form D filing obligations and timing relative to first close

• FinCEN AML/KYC compliance: Customer Due Diligence programs embedded in the LP onboarding flow, meeting the January 2026 regulatory requirements

For managers running parallel Cayman (Reg S) and US (Reg D) structures, Allocations handles the US feeder layer — subscription documents, KYC, and cap table management — while the Cayman vehicle is administered offshore.

Reg A+, Reg CF, and Reg S offshore administration are outside Allocations' core scope — but understanding where each exemption sits helps GPs determine when Allocations is the right platform and when a different structure is needed.

Frequently Asked Questions

Can I use Reg D and Reg CF in the same offering? No. You cannot combine exemptions within a single offering. If you want to raise from both accredited investors and the general public, Reg A+ Tier 2 is the exemption that accommodates both — at the cost of SEC pre-qualification and ongoing reporting obligations. Reg D and Reg CF serve different structures and cannot be merged.

Can a foreign company use Regulation D? Yes. Foreign private issuers can use Reg D for US-targeted raises, provided they comply with the exemption's requirements. However, most foreign issuers raising from non-US investors use Reg S for the offshore component and add a Reg D tranche only if they specifically want US investor capital.

Do I need a lawyer to file Form D? Form D is a relatively straightforward SEC filing, but the underlying determination of which exemption applies — and whether your offering qualifies — is a legal analysis. Use counsel to confirm the exemption before launching the offering; the Form D itself can often be filed by a paralegal or administrator once the structure is confirmed.

Is Reg A+ available for real estate funds? Generally, no. Real estate funds structured as investment vehicles must comply with the Investment Company Act — which Reg A+ does not exempt them from. Real estate operating companies (REITs structured as operating companies, not funds) can use Reg A+. Confirm with counsel based on your specific structure.

What triggers an integration analysis between Reg D and Reg S? Integration concerns arise when a US issuer conducts a concurrent or near-concurrent domestic (Reg D) and offshore (Reg S) offering in a way that suggests they are part of the same plan of financing. The SEC has provided guidance that genuine offshore Reg S transactions generally do not integrate with concurrent Reg D domestic transactions, provided no directed selling efforts are made to US persons in connection with the offshore offering. Maintain a clean separation between the two investor populations.