SEC Registration Exemption: Reg D, 504, 506b, 506c, Regulation Crowdfunding & accredited investors

To raise startup funding in the U.S. with reasonable legal fees, an entrepreneur must choose an SEC exemption from full SEC registration. This applies whether you are using a convertible note, a SAFE (Simple Agreement for Future Equity), a priced round, or just about any other approach. This video explains the most commonly used exemption options and how they differ.
The most common exemption options are Regulation D ("Reg D") and within that the 3 common options are rules 504, 506b and 506c. Another option, under the Title III JOBS Act (crowdfunding for equity) is Regulation Crowdfunding.
This video explains exemption from state blue sky laws, and why that's important, why a safe harbor rule is helpful, and what an accredited investor is, which exemptions allow for a public offering to investors, and when a "demo day" event is exempted from the public offering restriction.

[@elijahparton5549]

Great overview of all these somewhat complicated exemptions. Thanks for making this video.

[@cremls]

Thanks, great and very helpful information!!

[@DillonLoomis22]

this was excellent and incredibly helpful, thank you so much!

[@Startupsos]

Thanks!

[@Brad_A]

@@Startupsos I am planning to have my foreign friends invest in my fund that’s primarily invest in index funds , Apple shares etc. What kind of license do I need? My friends who’s going to invest are less than 99 people and unaccredited, is 3C1 or Reg D 506(b) okay? Do I need to set up a LLC for that? My foreign friends don’t have to pay capital gain, so I would want to take advantage for that. Thank you in advance

[@ma3309]

Dude you’re a champ, thank you, your guideline is extremely helpful.

[@mfrapp20]

Very useful video. Thank you!

[@phinypuscas]

That was a very excellent and well-organized presentation! This channel is a true hidden gem. Thanks a ton!

[@sageknoll3285]

The summary at the end even saved me hitting the “back” button to pick up a few nuances I’d missed. Well done.

[@asdfafafdasfasdfs]

Regulation A+ please!

[@BairdHall]

Sorry for my language but Steve you are a fucking legend. Thanks for this. Do you have any content specific for launching startups in the crypto/decentralized space?

[@navketan1965]

Sir, Could you suggest few credit unions & small banks actively looking for new business loan customers. Banks are sitting on billion of dollars cash hoard & are getting only 2--3 % on CDs & that is not productive for the banks.Sir, Thank you.

[@sarahrieger8618]

Thank you for these videos! I have been searching for some time for more resources for private equity fund creation & management

GREAT VIDEO THANK YOU !!

[@skellep]

Very excellent. Do you have any thoughts/resources on raising angel funding under 506(b) for a crypto project? Seems to make sense to issue convertible shares which can be converted to tokens once our network is developed.

[@Startupsos]

Most startup investors want to invest in the value of your company by owning a piece of your company - so even for a crypto project, a convertible note would typically convert to stock, not to tokens.

[@gabebautista6521]

Awesome. I even enjoyed the salsa sound interference 💃🏽 🕺👍🏻

[@Startupsos]

Yay, thank you!

[@user-tv4kh8wt8w]

What SEC document does a company need to file when receiving investment? Is it form D?

[@Startupsos]

Yes, Form D if you are using one of the "Reg D" exemptions such as 504, 506b or 506c

[@user-tv4kh8wt8w]

@@Startupsos thank you for your reply! ive also been wondering does the investors have to file any paper work for SEC regarding their investment? Once again, thank you!

[@Sonu007]

Excellent presentation!

[@angiespangler12]

This wonderful explanations. Thank you!

[@Startupsos]

You're very welcome!

[@jonathancarrera4588]

Sir. How can we contact you with questions regarding this video? Thanks

[@Startupsos]

You can email me at steve "at" startupsos.com

[@desiaclementslewis8318]

thank you!

[@pascalhessami5981]

Thank you very much very informative

[@Startupsos]

You are very welcome

[@socrates76244]

Very helpful

[@Startupsos]

Thanks!

[@bogereayub1369]

What happens when am raising a friends and family round because my parents and friends may not have that much money to be accredited investors , if I decide to raise from them is it illegal with reference to the SEC or the ACC.thanks waiting for your answer.

[@Startupsos]

I would suggest consulting an attorney to understand your options. There are certainly exemptions that allow you to raise money from non-accredited investors - including Reg D rule 504, Reg D rule 506b, and Regulation Crowdfunding. Your state may also have taken advantage of the state-specific exemptions under Rule 147 or Rule 147A (which was not covered in this video). I believe there are 35 states that do have fundraising options under one of those two rules. Using 147 or 147A you are limited to raising money only from residents of that state, and it is primarily the state regulations you need to understand and follow. I know that in the case of Oregon, the state-specific exemption that uses Rule 147 (the Oregon Community Public Offering) does allow for non-accredited investors but it limits the amount each of them can invest.