Raising capital as a startup or private investment fund is never easy – especially when it involves navigating complex securities laws. One of the more powerful tools available is Rule 506(c) of Regulation D, which lets companies publicly market their offerings to investors. This is a game-changer for founders who don’t have a deep network of private investors and funds looking to broaden their investor base. But there’s been one big catch: the requirement to verify that every investor is truly “accredited.”
Under older SEC guidance, this meant startups had to review personal financial documents or pay for letters from CPAs, lawyers, or broker-dealers – something many early-stage founders simply couldn’t afford. That changed on March 12, 2025, when the SEC issued new guidance that gives fundraisers a simpler, more affordable option.
Here’s how it works:
If you set a minimum investment threshold of $200,000 for individuals or $1,000,000 for legal entities, you don’t need to collect tax returns or third-party letters. Instead, you can verify investor status if:
- The investor signs a written statement confirming they’re accredited (and cites the applicable rule).
- They confirm they’re not borrowing money to make the investment.
- You (the issuer) don’t know anything that contradicts what they’re saying.
While the minimum investment thresholds may be high for early-stage startups, this new approach can dramatically reduce legal and compliance costs while allowing issuers to publicly promote their offerings to a wider pool of potential investors.
If you are interested in more information about the SEC’s new guidance, see our in-depth article analyzing these requirements. If you have any questions about this guidance or need help ensuring that your fundraising efforts comply with applicable law, contact us at Wagner Hicks PLLC today.
