Regulation CF, or regulation crowdfunding if you prefer, is a newer exemption. It allows you to raise money online and publicly solicit investors. Unlike Regulation D offerings, Regulation CF will enable you to involve anyone, including accredited or nonaccredited investors.
However, there are limits on how much people are allowed to invest. The percentage is based on their net worth or income, but anyone can invest even a nominal amount. Another caveat here is that your overall offering amount is limited to just $5 million (which marks a stark increase over the original limit, which was only $1.07 million).
Another limitation is that all Regulation CF offerings must be placed through a FINRA registered crowdfunding portal. The crowdfunding portal is responsible for compliance with the investment requirements and may charge a minimum monthly fee or commissions between 3% to 10% of capital raised.
- Initially, an unaccredited investor with a net worth of less than $124,000 could only invest $2,500 or 5% of their lesser annual income or net worth. However, this has since changed, and unaccredited investors can invest 5 % of their greater annual income or net worth.
- Some investors may have a net worth of greater than $124,000 but are not accredited. They, too, can now invest 10% of their greater annual income or net worth.
- Accredited Investors can Invest UNLIMITED amounts.