We believe that startup companies represent the future, and it is our mission to make sure they understand everything they need to in order to be successful. Today, our goal is to help startups understand everything they need to know about Regulation D. 

What is Regulation D?

Regulation D is an exemption from SEC registration under the Jobs Act and it’s the one most commonly used by startups because it allows a startup to raise an unlimited amount of money. 

There are 2 main components to Regulation D:


506c allows a startup to raise an unlimited amount of money from accredited investors only and allows for the use of general solicitation.


506b allows a startup to raise an unlimited amount of money from accredited investors and up to 35 unaccredited investors. It does not allow for general solicitation. Although it allows for up to 35 unaccredited investors, the cost to do so could be prohibitively expensive. 

How Can My Startup Raise Money Using Regulation D?

In order to use regulation D, a startup must first verify that investors are accredited which can be done in 1 of 2 ways:

If the investors are from the close network of the entrepreneur, they can use the self-verification method. 

If they are made through general solicitation, tax returns and other forms of verification must be obtained. 

The startup must also file a Form Dwith the SEC either before the first investment or within 15 days of the first investment. Form D is a notice that includes the names and addresses of the company’s promoters, officers and directors along with details regarding the offering.

Startups must also comply with the state Blue Sky laws where the investor resides. This is also known as a notice requirement that needs to be filed with the state within 15 days of the sale. Each state has its own fee and some states require you to use the electronic filing depository (EFD) in order to make the filing. You can expect to pay around $155 to use that system. 

Note: Florida and Indiana are the only states that don’t have a filing fee associated with state Blue Sky laws. In the state of New Yorkthere is case law that states an offering and subsequent sale of shares to a limited number of sophisticated investors within the state of New York is considered to be outside of the scope of the Martin Act. Therefore, no filing is required.

If your company takes advantage of an exemption from registration, it should still provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information a company provides to investors must be free from false or misleading statements. 

Bottom Line:

Regulation D is the quickest and “easiest” way to raise an initial round of financing and a great starting point before getting into the other exemptions. 

If you still have questions on this topic, reaching out to a lawyer for advice is recommended. At Benemerito Attorneys at Law, we offer free consultations and would love to help guide you toward the right decision for your business. 

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This blog is for informative purposes only. This information does not constitute legal advice. You should consult with a licensed attorney that can advise you according to your particular circumstances.

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