Regulation Crowdfunding (Reg CF) is an SEC framework that lets startups raise money from non-accredited investors, ordinary members of the public, through registered online funding portals, subject to disclosure requirements and an annual fundraising cap.
Unlike a typical venture round, which is legally restricted to accredited investors, Reg CF specifically opens the door to smaller checks from a large number of everyday backers, similar in spirit to rewards-based crowdfunding but offering real equity or debt in return.
The tradeoff for that access is real: ongoing disclosure obligations, a fundraising cap, and a cap table that can end up with hundreds or thousands of small shareholders instead of a handful of institutional investors. Worth weighing against a traditional round, which usually means fewer, larger, more engaged investors on the cap table going forward.
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