Regulation D Is Not the Obstacle. Poor Guidance Is
Founders and fund managers often treat private capital raises as an area to move through as quickly as possible, assuming the legal side is unavoidable friction standing between them and closed capital. In reality, a well-structured Regulation D raise moves fast precisely because the legal groundwork is handled correctly the first time.
This section and all content below offers general information only and is not legal, tax, or investment advice. Outcomes depend on individual facts and circumstances, and you should consult qualified counsel for guidance specific to your situation.
The Three Documents That Anchor a Compliant Raise
A Private Placement Memorandum, or PPM, is the disclosure document that lays out the terms of the offering, the risks involved, and the rights of investors. If a company is raising money from accredited investors under Rule 506(b) or 506(c), the Securities Act does not require a PPM. Regulation D’s disclosure obligations are triggered mainly when non-accredited investors are involved. But that legal baseline understates market reality. Sophisticated investors, and the counsel and fund platforms behind them, expect a PPM as a matter of course, and a company that shows up without one signals either inexperience or an unwillingness to put its risk factors in writing. A Subscription Agreement is the contract each investor signs to formally commit capital under those terms. Form D is the notice filing submitted to the SEC after the offering begins, and it must be filed within 15 days of the first sale of securities.
Each document serves a distinct legal function, and skipping or rushing any one of them creates exposure that surfaces later, often during a future raise or an acquisition, when a buyer or investor’s counsel reviews your fundraising history.
Rule 506(b) vs Rule 506(c): The Operational Difference That Matters Most
Rule 506(b) permits raising from an unlimited number of accredited investors, plus up to 35 sophisticated non-accredited investors, but prohibits general solicitation entirely. Every investor needs a substantive, pre-existing relationship with the issuer before the raise begins.
Rule 506(c) permits general solicitation, meaning public marketing of the offering, but requires the issuer to take reasonable steps to verify that every investor is accredited. Self-certification does not meet this standard. Verification typically requires reviewing tax returns, bank or brokerage statements, or a written confirmation from a CPA, attorney, or registered broker-dealer.
As of March 2025, the SEC introduced a new method that issuers can certify that investors are accredited. Issuers relying on Rule 506(c) can satisfy the verification requirement through investor self-certification when the investor is making an investment equal to or above a minimum amount. Minimum investment amounts should be at least $200,000 for natural persons and at least $1 million for legal entities.
One operational detail catches more issuers off guard than any other: during an active 506(b) raise, publicizing the offering itself, posting terms, inviting people to invest, or directing an audience to subscription materials, on LinkedIn or any other public platform, can jeopardize the exemption. What crosses the line is content that functions as an offer or advertisement for the securities, not merely any mention of the company or fund. A founder can generally still post about business progress, hiring, or general updates without automatically triggering general solicitation, but once a post ties back to soliciting investment in a specific, ongoing offering, that communication gets integrated into the offering and can taint it. The exemption you choose determines what you can say publicly about an active raise, not just how you find investors.
Blue Sky Laws Do Not Disappear Because You Filed Federally
A federal Regulation D exemption does not automatically satisfy state securities law. Most states still require a notice filing, generally tied to your Form D submission, and some carry their own fees and deadlines. For issuers raising from investors across multiple states, Blue Sky compliance is not optional paperwork. It is a separate layer of filings that has to be tracked state by state.
The Bottom Line
Regulation D capital raises do not have to be slow, opaque, or filled with legal landmines. They move efficiently when the PPM, Subscription Agreement, Form D filing, and exemption strategy are handled by counsel who structures these raises regularly.
If you are raising capital this fall, now is the time to get your documents in order. Faison Law Group structures compliant private placements for founders and fund managers. Book a call to get started.
Frequently Asked Questions About Private Placements
What is a Private Placement Memorandum?
A PPM is the disclosure document that lays out your offering’s terms, risks, and investor rights. It’s a separate document from your pitch deck, and regulators only care about the PPM being done correctly.
What’s the difference between Rule 506(b) and Rule 506(c)?
Rule 506(b) prohibits general solicitation entirely, so you can only raise from investors you already have a relationship with. Rule 506(c) allows public marketing, but requires you to verify every investor’s accredited status with actual documentation.
Can I post about my raise on social media?
Only if you’re raising under Rule 506(c). Posting raise updates or investor progress on LinkedIn during a 506(b) raise violates the prohibition on general solicitation.
Do I need to file separately in each state?
Often, yes. A federal Regulation D exemption doesn’t automatically satisfy state securities law. Most states require their own notice filing tied to your Form D, and some have their own fees and deadlines.
What is Form D and when is it due?
Form D is the notice filing you submit to the SEC after your offering begins. It has to be filed within 15 days of your first sale of securities.