Crowdfunding and Regulation CF for a software company

This article is general information, not legal or financial advice. It was written on October 10, 2026, from the public sources listed on this page, and it does not describe any agreement with World Enterprise. Securities rules change and have exceptions, so confirm the current position with your own lawyer.

Crowdfunding covers several things. This article covers one form only: Regulation Crowdfunding, the United States exemption that, in the SEC’s words, enables eligible companies to offer and sell securities through crowdfunding. It does not cover donation or rewards campaigns, which none of the fetched sources describe, and it is written for a founder deciding whether the route is open to them at all. For founders outside the United States, that question comes first.

Is your company eligible?

The rule is 17 CFR Part 227. Its section 227.100(b) lists issuers to which the exemption does not apply. The first is an issuer that is not organized under, and subject to, the laws of a State or territory of the United States or the District of Columbia. A company formed elsewhere is therefore outside the exemption as the rule is written. If you work from another country, that is a question about your corporate structure, and only counsel can tell you what a different structure would involve and what it would change. This article does not cover it.

The same paragraph also excludes an issuer that:

• is required to file reports under the Securities Exchange Act of 1934;
• is an investment company, or is excluded from that definition by particular provisions of the Investment Company Act;
• is disqualified under section 227.503(a);
• has sold under the exemption and has not filed the ongoing annual reports the rule requires; or
• has no specific business plan, or has said its plan is to merge with or acquire an unidentified company.

For counting amounts, the rule treats the issuer as including entities it controls or that are under common control with it, and its predecessors.

What the rule limits

An issuer may sell no more than $5,000,000 in total under the exemption in the 12 months before the offer or sale, including the securities in that transaction. The SEC’s exempt offerings page describes the route as one that enables certain companies to offer and sell securities on an internet based platform.

Investors have limits too. For an investor who is not accredited, the total across all issuers in a 12-month period may not exceed the greater of $2,500 or 5 percent of the greater of the investor’s annual income or net worth, if either figure is less than $124,000. If both are $124,000 or more, the limit is 10 percent of the greater figure, and never more than $124,000. The rule lets an issuer rely on the intermediary’s efforts to keep investors within their limits, provided the issuer does not know that an investor has exceeded them.

For a founder, the limits shape the arithmetic. If investors are not accredited, a raise near the ceiling would need many of them, because each one’s limit is a fraction of their own income or net worth. Work out how many investors a target would need before you plan the story.

One intermediary, and what it must disclose

The transaction must be conducted through an intermediary and exclusively through that intermediary’s platform, and an issuer may not run an offering or concurrent offerings through more than one. The SEC’s Regulation Crowdfunding page says the rules require all transactions to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal.

Your offering documents must name the intermediary with its SEC file number and, where applicable, its Central Registration Depository number. They must also describe the intermediary’s financial interests: the compensation to be paid, as a dollar amount or a percentage of the offering amount or a good faith estimate, including referral and other fees, and any direct or indirect interest in your company or arrangement to acquire one. So ask each intermediary you consider to state both in writing before you choose. This article names no platform and does not compare them.

What you file and what you disclose

Before the offering begins, an issuer files a Form C offering statement with the SEC and provides it to investors and the intermediary. The rule’s disclosure list in section 227.201 is long. It includes:

• the legal form and jurisdiction of the company, its directors and officers and their business experience over the past three years, and each holder of 20 percent or more of its voting equity;
• a description of the business and the plan, the number of employees, and a discussion of the material factors that make an investment speculative or risky;
• the target offering amount and the deadline, with a statement that if commitments do not reach the target by the deadline, no securities will be sold and the money is returned;
• the purpose and intended use of the proceeds, and the price or the method for setting it;
• the terms of the securities offered and each other class, how the offered securities are valued and may be valued later, and the risks of minority ownership;
• the material terms of any indebtedness, any exempt offerings in the past three years, and transactions with insiders above a stated threshold; and
• a discussion of the company’s financial condition, with financial statements.

The level of financial statement depends on your target offering amount added to what you sold under the exemption in the preceding 12 months. For $124,000 or less, the rule asks for income tax return line items and financial statements certified by the principal executive officer. Above $124,000 and up to $618,000, it asks for statements reviewed by an independent public accountant. Above $618,000, it asks for audited statements, with a different rule for a first-time issuer whose target is up to $1,235,000. Ask counsel and an accountant which tier your plan would fall into, and what it would cost to prepare.

The duties continue afterward. An issuer that has sold under the exemption must file an annual report and post it on its website no later than 120 days after the end of the fiscal year, until one of the rule’s end conditions occurs.

Talking about your offering

A solo founder usually promotes their own work, which makes the advertising rule important. Section 227.204 says an issuer may not, directly or indirectly, advertise the terms of the offering, other than by a notice that directs investors to the intermediary’s platform and includes only the information the rule lists. The terms of the offering include the amount offered, the nature and price of the securities, the closing date, the planned use of proceeds and progress toward the target. Communications through the channels the intermediary provides are allowed if you identify yourself as the issuer.

Before the offering statement is filed, section 227.206 allows an issuer to communicate to find out whether there is interest in a contemplated offering. No money or commitment may be solicited or accepted until the statement is filed, and the communication must carry the statements the rule requires. If you pay anyone to promote the offering through the intermediary’s channels, section 227.205 requires that the person disclose the compensation. Have counsel read any post, email or video that mentions the amount, the price, the closing date or the use of proceeds before it goes out.

What your investors are told

The rule decides what the crowd is told about you and what they can do. Your offering statement must include a discussion of the material factors that make an investment in the company speculative or risky, and the risks to purchasers relating to minority ownership. It must also describe the terms of each other class of your securities, so a clear record of your own classes of stock matters, and another article on this desk covers cap tables. An investor may cancel a commitment for any reason until 48 hours before the deadline. If the offering changes materially, the commitment is cancelled unless the investor reconfirms within five business days of receiving the notice. Securities sold under the exemption generally may not be transferred during the one-year period beginning when they were issued, with exceptions the rule lists.

The SEC’s Regulation Crowdfunding page also lists an investor bulletin titled “Be Cautious of SAFEs in Crowdfunding”. This article does not summarize that bulletin, so read it and ask your counsel whether a SAFE suits this route. The SAFE guide describes the instrument, and the differences between instruments are for your counsel to weigh against the rule’s disclosure of the terms of the securities.

If a raise of this kind interests you, prepare as you would for any other. The investor readiness checklist and the data room guide cover the records that the disclosure list above will ask you to state. For comparison with other kinds of investor, read choosing the right first investors for a SaaS company.

Questions to bring to your counsel

• Is my company organized in a place that allows it to rely on the exemption, and if not, what would a change involve?
• Do any of the excluded categories apply to me or to entities I control?
• Which financial statement tier would my target fall into, and who prepares it?
• What do the intermediaries I am considering charge, and what interest do they take in my company?
• What may I say, and where, before and during the offering?
• What reports must I file afterward, and for how long?
• Which of the questions in questions to ask your counsel before you sign apply?

What this article cannot tell you

This article cannot tell you whether crowdfunding suits your company, how much you would raise, or what an intermediary or a filing would cost. It describes the United States rule as published on October 10, 2026, and it summarizes rather than reproduces it. It does not cover state securities law, other countries’ rules, tax, or donation and rewards campaigns. Nothing here is a recommendation of an intermediary, a lawyer, an investor or a platform.

In the data

These figures describe U.S. businesses in general, not WE’s results. Each one names its source.

• 20.4% closed in year 1
• 29.4% closed in years 2 to 5
• 15.5% closed in years 6 to 10
• 34.7% still open at year 10

Each square is one in every hundred establishments that opened in 2015. Squares are rounded so they add to 100; the exact figures are in the table.

Show the data as a table

Of 100 establishments that opened in 2015, how many were still open at year 10

Group	Exact figure	Squares (of 100)
closed in year 1	20.4%	20
closed in years 2 to 5	29.4%	29
closed in years 6 to 10	15.5%	16
still open at year 10	34.7%	35

Source: U.S. Bureau of Labor Statistics, Business Employment Dynamics, Table 7 , Data through March 2025

Retrieved 2026-10-15. Each share is a difference between two published survival rates (all private industries); the squares are rounded to add to 100.

Sources

1. Regulation Crowdfunding, 17 CFR Part 227 (ecfr.gov/current/title-17/chapter-II/part-227), U.S. Securities and Exchange Commission (eCFR) . Accessed October 10, 2026.
2. Regulation Crowdfunding, 17 CFR 227.304 (ecfr.gov/current/title-17/section-227.304), U.S. Securities and Exchange Commission (eCFR) . Accessed October 10, 2026.
3. Regulation Crowdfunding, 17 CFR 227.501 (ecfr.gov/current/title-17/section-227.501), U.S. Securities and Exchange Commission (eCFR) . Accessed October 10, 2026.
4. Regulation Crowdfunding, U.S. Securities and Exchange Commission . Accessed October 10, 2026.
5. Exempt Offerings, U.S. Securities and Exchange Commission . Accessed October 10, 2026.

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