Squaring the Circle: Exclusivity in Regulation Crowdfunding (Reg CF)

The rise of Regulation Crowdfunding (Reg CF) has significantly changed the small business financing landscape by allowing entrepreneurs to raise capital from a broad investor base. However, there has been a recent debate within the industry about the extent to which the investor base can be exclusive. The question is whether it is possible to attach exclusivity to a Reg CF offering while still meeting the regulatory requirements for broad public availability.

While this may seem like a matter of marketing semantics, it actually raises important compliance concerns. Many founders who utilize Reg CF promote their offerings through email newsletters to investors, and some crowdfunding platforms have agreed to make these offerings private, non-searchable, and exclusive to a particular audience for a certain period of time after launch.

This strategy, however, conflicts with Rule 303 of Reg CF, which requires intermediaries, such as crowdfunding platforms, to make issuer-provided information publicly available. Transparency and equal access to information for all potential investors are core principles of Reg CF, and exclusivity goes against these principles.

The Securities and Exchange Commission (SEC) has provided clarity on this matter, stating that Reg CF offerings must be public and not exclusive to a specific group of potential investors. “Publicly available” means accessible to everyone.

In conclusion, while it is important to support innovative financing options and accommodate industry stakeholders’ needs, transparency, equal access, and investor protection must not be compromised. The SEC’s position is clear, and platforms must adhere to the requirement of making offerings publicly available to avoid regulatory sanctions.

Howard Marks, the co-founder of Activision Studios and CEO of StartEngine, one of the largest equity crowdfunding platforms in the US, emphasizes the importance of ongoing dialogue and collaboration among stakeholders for the continued development and success of Regulation Crowdfunding. StartEngine, along with its recent acquisition of SeedInvest, boasts a community of 1.8 million users who have collectively invested over $1.2 billion in startups. To raise funds, invest, or trade on the StartEngine platform, visit

Note: This article was written by Howard Marks, the co-founder of Activision Studios and CEO of StartEngine. StartEngine Crowdfunding Inc. is a funding portal registered with the US Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA). StartEngine Primary LLC is a broker-dealer registered with the SEC and FINRA/SIPC. StartEngine Secondary is an alternative trading system regulated by the SEC and operated by StartEngine Primary.

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