Reg D is part of the SEC’s rules and regulations, and was updated in 2013 as part of Title II in the 2012 JOBS Act.
This one is barely “crowdfunding” as most people think about it, it’s basically just updating the 1933-era restrictions on how private companies could raise money to reflect the realities of the 21st century, especially the Web. The main change is that now private companies can “generally solicit” investors (meaning advertise and have websites and stuff), but they have to make sure that a person who actually invests is an “accredited investor” and meets specific income or net worth criteria. Title II is why you now hear ads on the radio starting with “Attention accredited investors…” This part of the JOBS Act was the first of these three to go into effect (back in 2013), so is the most mature part of the ecosystem. Most of the crowdfunding platforms you’ve heard of so far probably fit under Title II.
- Examples: FundersClub, MicroVentures, RealtyShares, YieldStreet
- The fine print: As a result of Title II, the SEC updated “Rule 506” of their “Regulation D” to now include two parts, “Rule 506(b)” and “Rule 506(c)”.
More on Reg D
You can find more information on the various types of offerings over at our blog, or search our database of online crowdfunding, real estate, and alternative investment platforms.