In July we reviewed some preliminary information about how Reg CF was doing; now that the calendar year is over, the SEC’s Office of Corporate Finance has released a white paper reviewing the Reg CF offering data from 2016. Let’s take a look.

In May 2016, Regulation CF (also called Title III) went into effect. The CF stands for crowdfunding, and it created a new way for companies to conduct internet-based securities offerings. It was part of the JOBS Act of 2012, and allows entrepreneurs and companies to raise up to $1 million per 12-month period through equity crowdfunding.              


Each month in 2016 after Reg CF went into effect, an average of 22 new offerings were filed. In total, 163 unique offerings from 156 issuers were filed from May to December. The median offering targeted a raise of $53k; the average offering targeted a raise of $110k. Almost all the offerings accepted oversubscriptions, meaning that their filing allowed them to collect more than their target if their target was exceeded.

Most offerings were solicited in all states, and the most popular type of securities offered was equity (common stock), followed by SAFEs and debt. (Click here for more on the differences between these types of securities.)

The most popular state of incorporation for issuers was Delaware, and the most popular location for the business was California. The median issuer had $50k in assets, under $5k in cash, $10k in debt, no revenues, and 3 employees.

Funding portals accounted for most of the offering activity, likely because portals can offer a streamlined process and access to an existing pool of investors.

Attributes of successful offerings

All of the offerings that reported reaching their target amount raised more than their target. The average amount of successful raises was $303k; the median was $171k.

Comparing the successful versus unsuccessful offerings yields a few interesting observations. The successful offerings tended to have a slightly lower target (a median of $70k vs $100k) and a shorter duration (median of 1.8 months vs 2.0 months). While Reg CF is still in its infancy and a lot could change, this seems to indicate that internet-based securities offerings do better with a short raise cycle that encourages people to act now or miss out. It also indicates that these issuers have been able to target a group of investors and activate them quickly.

Attributes of successful issuers

What kind of companies are pulling off successful Reg CF raises? The typical issuer is a small, young startup. The median issuer age (based on when they filed for incorporation) was 1.5 years; however, only 24% of successful issuers were less than three months old at the time they filed paperwork for Reg CF. The majority were organized as corporations (with the largest chunk of those filed in Delaware, as previously mentioned).

Successful issuers tended to have more assets and cash on hand than the unsuccessful issuers, but they were also likely to have a little more debt.


The purpose of Reg CF was to help small and startup businesses conduct comparatively low-dollar raises on the internet. Looking at the results of the first calendar year, it seems to be attracting precisely those for whom it was intended.

Investors will be interested to know that the data indicates high growth potential among issuers. In the SEC whitepaper, the authors write, “There are indications that many issuers have high growth opportunities. Among those that reported non-zero total assets or sales in the prior fiscal year, the median asset growth was 15% and median sales growth 80% for the most recent fiscal year.”

Reg CF is still a very new way to raise capital. However, it’s being used, it’s being used successfully, and it’s being used by those for whom it was created. These are extremely encouraging indicators. Every month in 2016 that Reg CF was in effect, it was used by more issuers, at a steadily increasing pace. As we increase fundraising choices for our clients, Reg CF continues to be a great way for companies to raise funds without as much of the red tape required for more complex offerings.

Curious what kind of raise is right for you? We can help.