Recent Securities and Exchange (SEC) reports on Regulation A (Reg A)and equity crowdfunding underscore a familiar trend: while both exemptions have helped startups access capital, their overall market share remains modest. Since their respective launches, Reg A issuers have raised just over $9.4 billion across 817 offerings, while Regulation Crowdfunding (Reg CF) has generated $1.3 billion across nearly 3,900 offerings, figures dwarfed by traditional initial public offerings (IPOs) and the $2 trillion+ raised annually under Regulation D (Reg D) private placements.[1][2]
Activity peaked around 2021–2022, fueled by pandemic-era capital surges and higher SEC-imposed caps ($75M for Reg A; $5M for Reg CF). But by 2024, filings under both exemptions had declined sharply, Reg A filings dropped 67% from their peak, and Reg CF filings fell by over a third.[2]
What is Reg A?
Reg A is an exemption from SEC registration that allows companies to publicly offer securities with fewer requirements than full registration. There are two tiers: Tier 1 allows offerings up to $20 million and requires state-level qualification but no ongoing reporting; Tier 2 allows up to $75 million with SEC-only qualification, audited financials, and ongoing reporting. Both tiers require filing an offering statement with the SEC, including a disclosure document similar to a prospectus. Tier 2 also limits how much non-accredited investors can invest.[3]
What's Holding These Exemptions Back?
The SEC attributes the slow growth of Reg A and crowdfunding to several structural headwinds. First, while both exemptions allow non-accredited investors to participate, they impose strict investment limits and compliance obligations that are not required under Reg D. Second, most issuers are early-stage, unprofitable companies with limited investor visibility, making it difficult to generate traction. Third, liquidity remains a challenge: only 4% of Reg A issuers are listed on national exchanges, and secondary trading is often constrained by state-level laws.[1] Finally, many offerings lack robust underwriting support. Without firm commitments from banks, most Reg A and crowdfunding deals are conducted on a "best efforts" or self-directed basis, leaving issuers with no guarantee that the full offering will be sold.[4]
Still, there are signs of success. Newsmax's $75M Reg A raise and New York Stock Exchange (NYSE) listing in March 2025 demonstrated that larger, well-known companies can use the exemption to go public, though it relied on a best-efforts structure rather than traditional underwriting.[4]
Reform Conversations Are Gaining Momentum
With a pro-capital formation majority now at the SEC, reform ideas are gaining traction. One proposal under consideration is raising the offering limits to make Regulation A more attractive to capital-intensive issuers, particularly in sectors like biotechnology and media. Another is improving secondary trading: the SEC's Small Business Capital Formation Advisory Committee has recommended that the Commission preempt state-level restrictions that currently hinder liquidity in Reg A markets.
At the same time, any move to loosen restrictions has drawn pushback. Critics warn that removing guardrails could expose retail investors to illiquid, opaque markets that lack the protections of public securities.
Looking Ahead
The SEC's latest data confirms Reg A and crowdfunding serve important functions but remain underutilized. As reform discussions continue, the challenge will be to unlock broader access to capital while preserving the transparency and accountability investors expect.
Footnotes
1. SEC. (2025, May 28). SEC Publishes Data on Regulation A, Crowdfunding Offerings. https://www.sec.gov/newsroom/press-releases/2025-79-sec-publishes-data-regulation-crowdfunding-offerings-private-fund-beneficial-ownership-concentration
2. Crowdfund Insider. (2025, Apr. 29). SEC Shares Exempt Offering Numbers: Reg D, Reg A, Reg CF – All Down in 2024. https://www.crowdfundinsider.com/2025/04/239047-sec-shares-exempt-offering-numbers-reg-d-reg-a-reg-cf-all-down-in-2024/
3. Kenton, W. (2024, April 30). What Is Regulation A? Definition, Update, Documentation, and Tiers. https://www.investopedia.com/terms/r/regulationa.asp
4. Renaissance Capital. (2025, Mar. 28). Newsmax completes $75 million Reg A+ IPO, begins trading on NYSE. https://www.renaissancecapital.com/IPO-Center/News/110156/Conservative-media-company-Newsmax-completes-$75-million-US-IPO-set-to-begi
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