Data as of Aug 25, 2026 · Based on 292 AI responses from ChatGPT Search and Google AI Mode · See how Parse measures this
StartEngineYour brand can be here too.
Source | Citation share |
|---|---|
 What Pathways Are Available to Raise Capital From Investors ...https://www.sec.gov/resources-small-businesses/smallbiz-essentials-what-pathways-are-available-raise-capital-investors | 6.9% |
 Raising money from unaccredited investors - Cooley GOhttps://www.cooleygo.com/can-you-raise-money-from-unaccredited-investors/ | 4.7% |
 Raising Funds With Non-Accredited Investors - Varnum LLPhttps://www.varnumlaw.com/insights/my-mother-wants-to-invest-in-my-startup-raising-funds-with-non-accredited-investors/ | 4.5% |
 can i have unaccredited investors - Orrickhttps://www.orrick.com/en/tech-studio/resources/faq/can-i-have-unaccredited-investors | 2.8% |
 Receiving Money From Non-Accredited Investorshttps://aminiconant.com/receiving-money-from-non-accredited-investors/ | 2.6% |
Regulation Crowdfunding - SEC.govhttps://www.sec.gov/resources-small-businesses/exempt-offerings/regulation-crowdfunding | 2.4% |
SEC.gov | Regulation Crowdfunding: Guidance for Issuershttps://www.sec.gov/resources-small-businesses/regulation-crowdfunding-guidance-issuers | 2.3% |
 Why You (Probably) Shouldn't Raise From Non-Accredited Investors ...https://capbase.com/why-you-probably-shouldnt-raise-from-non-accredited-investors/ | 2.3% |
 How to Raise Money from Non-Accredited Investors (and Why You Shouldn’t) — Matthew Glick Legal Serviceshttps://www.mglick.legal/mgls-insights/2022/9/8/how-to-raise-money-from-non-accredited-investors-and-why-you-shouldnt | 2.1% |
 What is a Non-Accredited Investor? - iCapitalhttps://icapital.com/insights/practice-management/what-is-a-non-accredited-investor/ | 1.7% |
Yes. Assuming you mean **investing in your U.S. company in exchange for equity, LLC interests, SAFEs, convertible notes, or another security**, you can legally take money from non-accredited investors—but you need to structure the offering around a securities-law exemption. The three routes I'd look at first are:…
Yes. Assuming you mean investing in your U.S. company in exchange for equity, LLC interests, SAFEs, convertible notes, or another security, you can legally take money from non-accredited investors—but you need to structure the offering around a securities-law exemption.
The three routes I'd look at first are:
| Route | Non-accredited investors? | Typical use |
|---|---|---|
| Rule 506(b) | Yes, up to 35 qualifying non-accredited investors | Private raise from your existing network |
| Regulation Crowdfunding (Reg CF) | Yes | Smaller raise open to a broader group |
| Regulation A | Yes | Larger raise, but substantially more expensive/complex |
You can raise an unlimited amount under Rule 506(b), and you can include up to 35 non-accredited investors. However, those non-accredited investors must have sufficient financial/business knowledge and experience to evaluate the investment, or invest with a purchaser representative.
There are important conditions:
For a founder saying, "I have 10–20 people I know who want to invest $5k–$50k each," 506(b) is often the first structure worth discussing with a securities attorney.
Reg CF lets eligible companies raise up to $5 million in a 12-month period from accredited and non-accredited investors. But the offering must go through an SEC-registered broker-dealer or funding portal.
Non-accredited investors have investment limits based on their income/net worth. For example, under the current SEC guidance, if either income or net worth is below $124,000, the limit is generally the greater of $2,500 or 5% of the greater amount; if both are at least $124,000, the limit is generally 10%, subject to an overall $124,000 12-month cap.
The tradeoff is more public disclosure and administrative overhead, but it can be attractive if you want to let lots of people—including people outside your existing network—invest.
Regulation A has two tiers:
Tier 2 permits non-accredited investors, but generally limits their investment to 10% of the greater of annual income or net worth (for individuals). Tier 2 also involves audited financial statements and ongoing SEC reporting.
For a typical startup raising a relatively modest round from friends, customers, or professional contacts, this is usually much more machinery than necessary.
Don't simply create an LLC, give people an ownership percentage in exchange for checks, and assume that because they're "friends and family" securities laws don't apply.
The SEC's basic rule is that an offer/sale of securities must either be registered or qualify for an exemption.
Also, don't have an investor simply check a box saying they're accredited. If you're relying on an exemption that requires accredited investors, the SEC has specific standards for determining/confirming accredited status.
If your goal is something like:
"I want to raise $250k–$1M from 10–30 people in my existing network, some of whom aren't accredited." I'd typically investigate Rule 506(b) first.
The process would roughly be:
One particularly important point: the legal structure of the investment matters. A SAFE, convertible note, stock issuance, LLC membership interest, and revenue-share agreement can have different securities-law and tax consequences.
If you tell me (a) your state, (b) what your company is—a C-corp, S-corp, or LLC, (c) roughly how much you want to raise, (d) how many investors, and (e) whether they're mostly friends/customers/business contacts, I can lay out the most likely exemption and the compliance steps/costs to discuss with your attorney.
Also, don't have an investor simply check a box saying they're accredited. If you're relying on an exemption that requires accredited investors, the SEC has specific standards for determining/confirming accredited status.
If your goal is something like:
"I want to raise $250k–$1M from 10–30 people in my existing network, some of whom aren't accredited." I'd typically investigate Rule 506(b) first.
The process would roughly be:
Accepting investments from non-accredited investors (friends, family, and network contacts who don't meet the SEC's wealth/income thresholds) is legally possible in the U.S., but it requires strict adherence to specific federal and state exemptions. Because non-accredited investors are viewed as needing higher…
Accepting investments from non-accredited investors (friends, family, and network contacts who don't meet the SEC's wealth/income thresholds) is legally possible in the U.S., but it requires strict adherence to specific federal and state exemptions. Because non-accredited investors are viewed as needing higher regulatory protection, failing to follow these pathways can lead to severe penalties or rescission rights (where investors can demand their money back).
The primary legal mechanisms to achieve this include:
Practical Steps to Stay Compliant
To help narrow down the best path, could you share:
Legally accepting investments from non-accredited investors (friends, family, and community members in your network) requires navigating strict federal and state securities laws. Because securities laws treat the public as vulnerable to fraud, you cannot simply take a check from anyone without an…
Legally accepting investments from non-accredited investors (friends, family, and community members in your network) requires navigating strict federal and state securities laws. Because securities laws treat the public as vulnerable to fraud, you cannot simply take a check from anyone without an exemption.
To do this legally in the U.S., you must utilize specific exemptions provided by the SEC. The three most viable paths include:
Summary Checklist Before Taking Money
If you tell me how much capital you are hoping to raise and roughly how many non-accredited investors you have in mind, I can help point you toward the most cost-effective legal exemption structure.
Yes. In the U.S., you **can legally raise money from non-accredited investors**, but the exemption you use determines how you can solicit them, how much they can invest, and what disclosures you must provide. The key point: **you generally can't just take checks from friends and acquaintances because they're in your…
Yes. In the U.S., you can legally raise money from non-accredited investors, but the exemption you use determines how you can solicit them, how much they can invest, and what disclosures you must provide.
The key point: you generally can't just take checks from friends and acquaintances because they're in your network. The sale of an LLC interest, stock, SAFE, convertible note, etc. is usually a securities transaction, so you need a registration exemption.
This can work particularly well if you're raising from people you already know.
Under Rule 506(b):
So, for example, if you have 15 people in your personal/business network who want to invest $10,000–$50,000 each, 506(b) may be worth exploring.
Importantly, simply being someone you know doesn't make them accredited. The SEC's current accredited-investor criteria include, among other things, $1M+ net worth excluding the primary residence or income exceeding $200,000 individually/$300,000 jointly in each of the prior two years with an expectation of the same level in the current year.
Regulation Crowdfunding (Reg CF) permits eligible companies to raise up to $5 million in a 12-month period from both accredited and non-accredited investors.
There are important requirements:
As of the SEC's current guidance, a non-accredited investor whose income or net worth is below $124,000 generally has a 12-month limit equal to the greater of $2,500 or 5% of the greater of income or net worth. If both are at least $124,000, the limit is 10% of the greater of income or net worth, subject to a $124,000 overall cap across Reg CF offerings.
This is attractive if you want to let dozens or hundreds of people in your broader network participate rather than keeping the round tightly private.
Regulation A can accommodate non-accredited investors and much larger offerings.
For a relatively small startup round among people you know, this is usually more infrastructure than you need.
If by "my network" you mean friends, former colleagues, customers, business contacts, and other people you personally know, I'd first have a securities attorney evaluate a Rule 506(b) private placement.
A typical structure might look like:
Your company → private offering under Rule 506(b) → investment agreement/SAFE/note/equity → investors
You'd want counsel to handle things such as:
Don't assume that "I'm only talking to people I know" = legal.
For example, if you're doing a 506(b) offering, publicly posting something like:
"I'm raising $500K for my startup. DM me if you'd like to invest." can create a serious problem because 506(b) prohibits general solicitation. The SEC specifically distinguishes 506(b), which prohibits general solicitation, from 506(c), which permits it but requires all purchasers to be accredited and the issuer to take reasonable steps to verify that status.
If you tell me (1) what you're raising, (2) roughly how much, (3) how many investors you expect, (4) whether they're friends/contacts versus the general public, and (5) what state your company is organized in, I can walk you through which exemption is likely to fit and what the process would look like. This is an area where getting a securities lawyer involved before accepting money is very worthwhile.
"I'm raising $500K for my startup. DM me if you'd like to invest." can create a serious problem because 506(b) prohibits general solicitation. The SEC specifically distinguishes 506(b), which prohibits general solicitation, from 506(c), which permits it but requires all purchasers to be accredited and the issuer to take reasonable steps to verify that status.
Legally accepting investments from non-accredited investors in your personal or professional network requires navigating federal and state securities laws. Under the U.S. Securities Act of 1933, every offer and sale of securities (including stock, convertible notes, or LLC membership units) must either be registered…
Legally accepting investments from non-accredited investors in your personal or professional network requires navigating federal and state securities laws. Under the U.S. Securities Act of 1933, every offer and sale of securities (including stock, convertible notes, or LLC membership units) must either be registered with the SEC or qualify for an exemption. Registering is prohibitively expensive and complex for most private companies, so you must rely on specific safe harbor exemptions.
The primary legal pathways to accept non-accredited investments from your network include:
Critical Compliance Steps
To help narrow down the best legal path, could you share:
Yes. In the U.S., **non-accredited investors can legally invest in private companies**, but you need to choose an exemption from SEC registration that permits them. The right route depends heavily on **how much you want to raise, how many people you want to accept, whether they're friends/family or the general public,…
Yes. In the U.S., non-accredited investors can legally invest in private companies, but you need to choose an exemption from SEC registration that permits them.
The right route depends heavily on how much you want to raise, how many people you want to accept, whether they're friends/family or the general public, and whether you want to advertise the offering.
| Route | Non-accredited investors? | Typical use |
|---|---|---|
| Rule 506(b) | Yes, up to 35 qualifying non-accredited investors | Private raise from your existing network |
| Regulation Crowdfunding (Reg CF) | Yes | Raise up to $5M from many investors |
| Regulation A Tier 1 | Yes | Public offering up to $20M |
| Regulation A Tier 2 | Yes | Public offering up to $75M |
| Rule 506(c) | No | Publicly marketed raise restricted to accredited investors |
The SEC specifically says Rule 506(b) permits sales to no more than 35 non-accredited investors, while Reg CF permits non-accredited investors subject to investment limits.
A Rule 506(b) offering can accommodate an unlimited number of accredited investors plus up to 35 non-accredited investors. The non-accredited investors must be sufficiently sophisticated to evaluate the investment, and you have additional disclosure obligations to them.
Crucially, you generally cannot publicly advertise the offering under 506(b). That's one reason it can fit a founder raising from people with whom they already have a relationship.
You'd typically have:
And you shouldn't assume that calling people "friends," "family," or "members of my network" makes the transaction exempt. The securities-law exemption has to actually fit the offering.
If you want to let lots of ordinary people invest—including people who aren't personally connected to you—Regulation Crowdfunding can be much more flexible.
You can currently raise up to $5 million in a 12-month period, but the offering must go through an SEC-registered broker-dealer or funding portal and requires specified disclosures/SEC filings.
Non-accredited investors have investment limits. Currently, if either their annual income or net worth is below $124,000, the limit is generally the greater of $2,500 or 5% of the greater figure. If both are at least $124,000, the limit is generally 10%, subject to a $124,000 12-month maximum.
So if, for example, you're trying to raise $500k–$2M from 50–200 people in your community, Reg CF may be worth serious consideration.
Reg A can accept non-accredited investors and is substantially more public-facing. Tier 1 allows up to $20M in 12 months; Tier 2 allows up to $75M. Tier 2 generally limits a non-accredited investor's investment to 10% of the greater of their annual income or net worth (with certain exceptions) and brings audited financials and ongoing reporting obligations.
For a relatively small friends-and-network raise, this is usually more machinery than you need.
If you're thinking of taking money from your network in exchange for equity, LLC interests, SAFEs, convertible notes, revenue shares, or similar upside, you should assume you're dealing with securities laws until a securities attorney determines otherwise.
A simple promissory loan can be a different legal situation, but it has its own securities, lending, usury, tax, and state-law considerations.
Don't start by collecting checks or sending out a pitch deck saying "invest $X for Y%."
Instead:
The SEC emphasizes that every offer and sale of securities must either be registered or qualify for an exemption.
If you tell me (1) how much you want to raise, (2) roughly how many investors you have in mind, (3) what states they're in, (4) whether they're mostly friends/family/customers, and (5) whether you want to advertise the opportunity publicly, I can narrow this down to the most practical legal structure for your situation.
If you want to accept investment from people in your network who are **not accredited investors**, you generally need to use a securities-law exemption that specifically allows non-accredited investors. You cannot simply take checks from friends, family, or your community without considering federal and state…
If you want to accept investment from people in your network who are not accredited investors, you generally need to use a securities-law exemption that specifically allows non-accredited investors. You cannot simply take checks from friends, family, or your community without considering federal and state securities rules. Any sale of an investment interest (stock, LLC units, SAFEs in many cases, notes, etc.) is usually a securities offering and must either be registered or fit an exemption.
Common legal paths include:
This is the main route designed for everyday investors.
Key features:
Examples of platforms that facilitate these offerings include registered crowdfunding portals (you would choose one that fits your company and offering).
This is a lighter-touch public offering exemption.
Key features:
This is usually more expensive and complex than Reg CF.
A private placement can include some non-accredited investors, but with significant constraints.
Under Rule 506(b):
This is often used for founder networks where the investors are personally known, but the compliance burden is higher than many founders expect.
If your company and investors are all in the same state, an intrastate exemption may be available. Rules vary by state and require careful analysis.
Avoid:
Even exempt offerings remain subject to anti-fraud rules—you still must provide accurate, non-misleading information about the company and investment.
A typical process is:
If you tell me:
I can help narrow down which exemption is likely the best fit.
Legally accepting investments from non-accredited investors requires navigating specific exemptions under federal (SEC) and state securities laws. Because selling securities without registration is illegal unless an exemption applies, you must use a formalized legal…
Legally accepting investments from non-accredited investors requires navigating specific exemptions under federal (SEC) and state securities laws. Because selling securities without registration is illegal unless an exemption applies, you must use a formalized legal pathway.
The primary, legally compliant pathways to accept money from non-accredited individuals in your personal or professional network include:
To help narrow down the best path, could you tell me:
Legally accepting investments from non-accredited investors in the U.S. requires relying on specific federal registration exemptions under the Securities Act of 1933 , most notably **Rule 506(b) of Regulation D** or **Regulation Crowdfunding (Reg…
Legally accepting investments from non-accredited investors in the U.S. requires relying on specific federal registration exemptions under the Securities Act of 1933 , most notably Rule 506(b) of Regulation D or Regulation Crowdfunding (Reg CF).
Because you mentioned taking investment from people within your network , your approach will heavily dictate which rule you can legally use.
Primary Legal Pathways
Key Compliance Steps for 506(b) (Network Raises)
If you proceed with Rule 506(b) using your existing network contacts, you must carefully manage compliance:
To help narrow down the best path, could you share:
I can give you a clearer picture of whether a private placement or a portal-based approach fits your goals.
Yes. **Non-accredited investors can legally invest in a private company**, but you need to choose a securities-law exemption that permits them. You generally cannot simply take money from friends, family, or your professional network in exchange for equity or a promise of returns without complying with securities…
Yes. Non-accredited investors can legally invest in a private company, but you need to choose a securities-law exemption that permits them. You generally cannot simply take money from friends, family, or your professional network in exchange for equity or a promise of returns without complying with securities laws.
The main routes are:
Under Regulation Crowdfunding (Reg CF), you can raise up to $5 million in a 12-month period from both accredited and non-accredited investors. The offering must go through an SEC-registered broker-dealer or funding portal, and you have required disclosures and SEC filings.
Non-accredited investors are subject to investment limits. Currently, depending on income and net worth, the limits generally use a 5% or 10% calculation, with an aggregate maximum of $124,000 across Reg CF offerings in a 12-month period.
Good fit if: you want 20, 50, or hundreds of people in your network to be able to participate with relatively small checks.
A Rule 506(b) private placement can include up to 35 non-accredited investors, provided those investors meet the rule's sophistication requirements. You cannot generally publicly advertise or solicit the offering.
If you accept non-accredited investors under 506(b), additional disclosure and financial-statement requirements apply. You also file Form D after the first sale, and state notice/fee requirements can apply.
Good fit if: you're raising from a relatively small group of people who already know you and the company, rather than making a public solicitation.
Regulation A Tier 1 allows offerings up to $20 million, while Tier 2 allows up to $75 million in a 12-month period. Non-accredited investors can participate. Tier 2 imposes a generally applicable 10%-of-income/net-worth investment limitation for individuals, along with significantly more disclosure, financial-statement, and ongoing-reporting obligations.
This is usually substantially more expensive and complicated than Reg CF.
Don't structure this as:
"I'll take $10,000 from 20 friends and give each of them 1% of my LLC."
and assume that because they're friends, it's exempt.
An ownership interest in an LLC, stock, convertible note, SAFE, or similar investment can be a security, and the offering needs a valid exemption or registration.
Also be careful about advertising the opportunity. For example, Rule 506(b) is fundamentally different from Reg CF because public solicitation can destroy the 506(b) exemption.
| Your situation | Likely route |
|---|---|
| 5–35 sophisticated people you personally know | 506(b) |
| Want non-accredited friends/customers/community members to invest | Reg CF |
| Want to publicly market a larger offering | Reg CF or Reg A |
| Raising >$5M from the general public | Reg A Tier 2 becomes worth examining |
| Everyone is accredited and you want a conventional private round | 506(b) or 506(c) |
One important distinction: if by "my network" you mean people you already know personally, 506(b) may be particularly attractive. If you want to post about the investment opportunity on social media, email a large list, or otherwise broadly solicit investors, Reg CF is often the cleaner structure.
Because this is a securities-law question, I'd have a startup/securities attorney choose the exemption and structure before accepting a dollar. The details of your entity (LLC vs. corporation), security (equity/SAFE/note), amount being raised, investor count, and how you plan to approach investors can materially change the answer.
If you tell me (1) how much you're trying to raise, (2) roughly how many investors, (3) whether they're friends/family, customers, or general members of your network, and (4) whether you want to advertise publicly, I can map out the most practical legal structure and the likely compliance steps.
