What Is Regulation Crowdfunding? A Plain-English Guide for Creators and Small Business Owners

You keep hearing about Reg CF. Maybe a friend mentioned it, or you saw a creator talking about raising money from their audience. But the government language makes it confusing fast.

Here is the plain-English version.

Reg CF in One Sentence

Regulation Crowdfunding is a federal law that lets any U.S. business raise money from regular people — not just wealthy investors — in exchange for a financial stake in the business.

Who Created It and Why

The JOBS Act passed in 2012 with the explicit goal of making it easier for small businesses to access capital. Title III — which became Reg CF — was finalized by the SEC in 2016 and updated in 2021 to raise the annual limit from $1.07M to $5M.

The problem it was solving: before Reg CF, securities laws meant that only accredited investors (people with over $1M in net worth or $200K annual income) could invest in early-stage companies. That locked out 97% of Americans from participating in startup upside. Reg CF opened the door.

How Much Can You Raise

Under Reg CF you can raise up to $5 million in any 12-month period from any combination of investors — accredited or not. There is no minimum raise amount, though platforms typically set their own minimums. RawFunds starts at $25,000.

Who Can Invest

Any U.S. resident can invest in a Reg CF raise. Non-accredited investors have annual limits based on income and net worth — typically $2,500 to $124,000 per year across all Reg CF investments. Accredited investors have no limit.

What Investors Receive

Three common structures: Equity (actual ownership shares), Revenue Share (a percentage of revenue until a cap is reached), or a SAFE Note (converts to equity at a future round). The terms are set by the business and disclosed in the SEC filing.

What the Business Has to Do

File Form C with the SEC (the platform handles this). Disclose financials — for raises under $124K, a CPA review; over $124K, a full audit for first-time issuers. Send regular updates to investors. The platform holds funds in escrow until the raise is complete.

Testing the Waters

Before committing to a full raise, you can legally gauge interest. Under SEC Rule 206, you can post a short pitch and collect non-binding expressions of interest. No money changes hands. No SEC filing required. This is called Testing the Waters, and RawFunds supports it for every issuer.

Start on RawFunds

RawFunds handles the infrastructure — filing, escrow, investor dashboard, compliance reporting. You focus on marketing the raise to your community. Platform fee: 5% on successfully funded raises only. Start at RawFunds.com.