Rules
Pitching under SEC rules, accredited investor and general solicitation
Entrepreneur guide to pitching under SEC rules: Regulation D, Rule 506(b) and 506(c), general solicitation, accredited investor thresholds and Form D.
What to take away
- Regulation D is the exemption most US startups use, and Rule 506(b) or Rule 506(c) decides whether you may advertise the raise.
- Rule 506(b) bans general solicitation but allows up to 35 non-accredited investors who meet a sophistication standard.
- Rule 506(c) allows advertising, and every buyer must be an accredited investor whose status you verify.
- An accredited investor meets an income test, a $1 million net worth test excluding the primary home, a qualifying credential, or an entity test.
- File Form D on EDGAR within 15 days of the first sale, then handle state notice filings and any amendment.
Why a pitch counts as a securities offer
Asking a stranger for money in exchange for equity is an offer of a security. Federal law applies whether you pitch in Austin or on a call with a Boston angel.
Registration is the default. Exemptions are the exception, and Regulation D is the one most seed rounds rely on.
Your deck carries legal weight once money changes hands. The financial literacy split of earn, spend, borrow and protect is a plain reason to read a term sheet as a contract rather than a compliment.
The Regulation D terms your pitch depends on
Regulation D terms
| Term | What it controls in your pitch |
|---|---|
| Rule 504 | Offerings up to $10 million in any 12 months, with lighter restrictions |
| Rule 506(b) | Private placement, no advertising, up to 35 non-accredited buyers |
| Rule 506(c) | Advertising allowed, accredited buyers only |
| Accredited investor | Income, net worth, credential and entity tests |
| General solicitation | Public posts, ads, press releases and cold outreach |
| Form D | Notice filing due within 15 days of the first sale |
Regulation D Exemptions
Rule 504
- Raise limit
- $10M / 12 mo
- Advertising
- Restricted
- Non-accredited buyers
- Allowed
- Verification
- Fewer restrictions
Rule 506(b)
- Raise limit
- Unlimited
- Advertising
- No general solicitation
- Non-accredited buyers
- Up to 35
- Verification
- Reasonable belief
Rule 506(c)
- Raise limit
- Unlimited
- Advertising
- Allowed
- Non-accredited buyers
- Not allowed
- Verification
- Reasonable steps required
Rule 504 exists, but a $10 million cap over 12 months rarely suits a priced equity round with resale limits. Rule 506(b) and Rule 506(c) both allow an unlimited raise amount and unlimited accredited investors.
The SEC's capital-raising building blocks explain exempt offerings for founders without a securities background.
Keep one definition of accredited investor across the deck, the private placement memorandum and the subscription agreement. A vocabulary tools guide that separates a glossary from a style guide is worth an hour before you draft.
Rule 506(b) or 506(c): the general solicitation line
Rule 506(b) is the traditional quiet placement. No public post, no press release, no demo day open to anyone, no cold email to a stranger. You may sell to unlimited accredited investors plus up to 35 non-accredited investors who meet a sophistication standard. Those buyers receive additional disclosure.
Rule 506(c) removes the advertising ban. You may post the round on LinkedIn, run a public webinar, or speak about it on a panel. Every purchaser must then be accredited, and self-certification is generally not enough, though a March 2025 SEC staff letter treats a high minimum investment, backed by written representations, as a relevant verification factor.
Verification evidence includes tax returns, bank or brokerage statements, or written confirmation from a licensed attorney, CPA, broker-dealer or registered investment adviser. The SEC page on general solicitation is the controlling text for advertising a private offering.
Example: the same $750,000 round under both rules
A Denver founder raising $750,000 from 20 angels wants to promote the round publicly. She picks 506(c), then collects a brokerage statement and a verification letter from each investor. Under 506(b) that post would be barred, though she could still accept a small check from a non-accredited friend who meets the sophistication test.
Who qualifies as an accredited investor
- Income above $200,000 in each of the two most recent years, or $300,000 jointly with a spouse or spousal equivalent, with a reasonable expectation of the same this year.
- Net worth above $1 million, alone or with a spouse, excluding the primary residence.
- A credential in good standing, such as a Series 7, Series 65 or Series 82 license, or status as a knowledgeable employee of a private fund.
- An entity test met by corporations, partnerships, LLCs, trusts with assets above $5 million, and certain family offices.
A business acumen guide that reads the three statements against what each one answers helps when an investor asks about your own numbers.
Form D and the paperwork after the first sale
- Confirm your exemption before you speak to any investor.
- Collect verification evidence for every 506(c) buyer before accepting funds.
- File Form D on EDGAR within 15 days of the first sale. There is no fee and the filing is public.
- File an amendment within 15 days of a material change, and an annual amendment while the offering continues.
- Handle the notice filing and fee in each state where you sold.
Form D Filing Timeline
- First saleOffering begins
- Within 15 daysFile Form D on EDGAR
- After amendmentFile amended Form D
- Same periodState notice filing and fee
Form D records issuer name, entity type, industry group, revenue range, investor count and the exemption claimed. The SEC forms index lists the form and its instructions.
The Delaware, Wyoming and California comparison matters because the entity type you state on Form D should match your charter. If a placement agent brings investors, that firm answers to FINRA rules rather than to you.
