Republic Has Listed 12 Reg CF Offerings that Have Hit $5 Million Funding Cap

In 2020, the Securities and Exchange Commission approved several improvements for securities crowdfunding. One of the most impactful updates was raising the funding limit under Reg CF to $5 million from $1.07 million. Prior to this, many industry insiders viewed the old funding cap as unsustainable and difficult to generate sufficient revenue as a stand alone exemption. How many one million funding rounds would you have to complete to operate a profitable funding portal? At least one securities crowdfunding platform operator viewed it as a loss leader designed to engage with firms and hopefully have them pursue a Reg A+ or Reg D down the road. In 2021 the changes came into effect and almost immediately issuers were raising $5 million under the exemption – indicative of the need.

Today, Republic has tweeted out that so far they have funded 12 offerings under Reg CF that have hit the $5 million funding cap.

It has been reported that the average seed round in 2021 was $3.8 million. While venture funding may be slowing down today, most certainly it will be a pause and not permanent. So perhaps the SEC should next consider increasing Reg CF to $10 million or $20 million. This should enable some issuers to make it through a seed round and perhaps a Series A. in 2021, the median Series A was $13 million per Crunchbase.

In the end, the goal should be to enable issuers access to the growth capital they need while allowing smaller investors access to quality deals – not just big money. Many promising private firms will seek future funding rounds and Reg CF can be a more effective ladder in this process while creating more opportunity for smaller investors.



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