Equity Crowdfunding (Reg CF & Reg A+): Investor Guide

Equity crowdfunding lets investors buy startup securities online under SEC pathways like Regulation Crowdfunding (Reg CF) and Regulation A (Reg A+), often through platforms such as StartEngine, Wefunder, and Republic.

The upside is earlier access to private companies. The tradeoff is real: illiquidity, dilution, and long timelines. This page covers the rules, the instruments (like SAFEs), and how serious investors evaluate deals.

Last updated: 2025-12-13Educational only • Not adviceLearn SAFEs →

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Reg CF vs Reg A+: What’s the difference?

“Equity crowdfunding” often refers to two common SEC pathways. Here’s the investor-level difference most people actually need.

Category	Reg CF	Reg A (Tier 2)
Max issuer raise (12 months)	Up to $5,000,000	Up to $75,000,000
Typical investor experience	Often smaller checks; many offerings use SAFEs	Often larger raises; more ongoing reporting (Tier 2)
Liquidity reality	Reg CF securities generally cannot be resold for one year (limited exceptions)	Still often illiquid; liquidity depends on company and markets
Where you’ll see it	Funding portals / broker-dealers	Issuer sites + qualified platforms

Verify rules in official sources: SEC Reg CF • SEC Regulation A

How equity crowdfunding works (step-by-step)

You pick an offering under Reg CF or Reg A and review the disclosure (Form C or offering circular).
You invest through the portal/intermediary (KYC/AML, escrow, confirmations).
You receive an instrument (priced equity, SAFE, note, etc.).
Over time, outcomes depend on execution, dilution, and eventual liquidity events.

Pro tip: save your executed agreement + a clean record of key terms (cap/discount, class, fees).

SAFE vs priced equity (the investor difference)

Many crowdfunding investors don’t realize they’re buying a contract (SAFE) instead of shares today. That’s why ownership can feel unclear until a future priced round.

Priced equity

Known share price and share count at purchase
More immediate ownership math
Still risky + illiquid, but clearer instrument

SAFE (Simple Agreement for Future Equity)

Contract now; shares later (if it converts)
Key terms: valuation cap, discount, triggers
Ownership is unknown until conversion

Deep dive: owntric.com/education/safes

Risks, liquidity, and sizing (read before you invest)

Illiquidity: many positions can’t be sold easily (or at all) for years.
Loss risk: startups fail; loss of principal is common.
Dilution: future rounds can reduce your ownership (especially before SAFE conversion).
Information gaps: updates can be sporadic compared to public stocks.
Time: “winning” outcomes often take 7–10+ years.

Equity crowdfunding checklist (pre-invest)

This checklist is designed for maximum signal: it’s what most investors wish they did before wiring money.

Instrument: SAFE vs priced equity vs note — know what you’re buying.
Terms: valuation cap/discount or price-per-share; post-money vs pre-money SAFE language.
Runway: burn rate + how long this raise lasts.
Cap table: stacked SAFEs/notes and any unusual preferences.
Use of proceeds: what milestones the raise funds.
Ownership + dilution: what happens in the next round?
Exit path: realistic acquisition targets, comps, or milestones.

Reg CF investing limit calculator (approx.)

Non-accredited: if either income or net worth is below the threshold, limit is the greater of $2,500 or 5% of the greater of income/net worth. Educational use only; platforms apply limits across all Reg CF purchases within a rolling 12-month period.

For non-accredited investors. Based on SEC guidance; platform rules and your situation may differ.

How to track equity crowdfunding like a pro

Portfolio tracking (core)

Track your cost basis, holdings, and updates across platforms in one place—so your investments don’t disappear into emails and PDFs.

Open Owntric →

Dedicated SAFE tracking (key edge)

Owntric offers a dedicated SAFE tracker so you can track those investments and monitor future priced equity rounds—turning “contract now” into a clear storyline over time.

SAFE Tracker →

Sources (verify the rules)

Last updated: 2025-12-13. These are the primary references for limits, resale restrictions, and requirements.

Equity crowdfunding FAQs

Is equity crowdfunding legit in the U.S.?

Yes—when offered under SEC rules like Reg CF or Reg A and sold through the required intermediaries and disclosures. Legit doesn’t mean low-risk: startup investing can lose money and is often illiquid.

What’s the difference between Reg CF and Reg A+?

Reg CF is a crowdfunding exemption with an issuer cap and non-accredited investor limits. Regulation A has Tier 1 and Tier 2 paths with different offering limits and reporting requirements—Tier 2 supports larger raises.

How much can a company raise under Reg CF?

The SEC states a company can raise up to $5 million in a 12-month period under Regulation Crowdfunding (subject to rules and disclosures).

How much can a company raise under Reg A+ Tier 2?

The SEC states Tier 2 offerings can be up to $75 million in a 12-month period (subject to requirements and ongoing reporting).

Who can invest in equity crowdfunding?

Both accredited and non-accredited investors can invest under Reg CF and Regulation A. Non-accredited investors have Reg CF limits across a 12-month period; accredited investors do not have the Reg CF limit (platform/issuer limits may still apply).

Can you sell equity crowdfunding shares?

Often not quickly. Reg CF securities generally cannot be resold for one year (with limited exceptions). After that, liquidity depends on whether a secondary market exists or the company has a liquidity event.

How do investors make money in equity crowdfunding?

Most returns (if any) come from a liquidity event: acquisition, IPO, a tender offer, or a buyback. Dividends are uncommon in early-stage startups. Timelines can be many years.

What is a SAFE in equity crowdfunding?

A SAFE (Simple Agreement for Future Equity) is a contract that converts into equity later—often during a future priced round. Many Reg CF offerings use SAFEs because they’re simpler than pricing shares today, but investors may not know their final share count at purchase.

What should investors watch out for in SAFEs?

Key items: valuation cap, discount, post-money vs pre-money language, conversion triggers, and how dilution can stack before conversion. If there’s never a priced round, conversion may be delayed or never happen.

Where do I find the real disclosures?

For Reg CF, read the Form C and its attachments (risk factors, financials, cap table notes). For Regulation A, read the offering circular (Form 1-A) and ongoing updates where applicable.

Educational content only; not legal, tax, or investment advice. Always read the offering documents.

SAFE guide • Valuation & ownership math • Portfolio tracking

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