Preparing a private capital raise before the pitch deck

The issue

Section 4(a)(2) of the Securities Act exempts “transactions by an issuer not involving any public offering,” and Regulation D supplies rules issuers commonly rely on for private offerings. The deck, website, webinar and first emails to prospects are all offering communications. Their permitted audience and content depend on the exemption chosen. When the deck comes first, the exemption is often chosen later to fit communications already sent, which can remove options.

Commercial context

The central trade-off is between reach and verification.

Under Rule 502(c), a Rule 506(b) offering may not use general solicitation or general advertising. The rule’s examples include advertisements and articles in newspapers, magazines or similar media, and seminars whose attendees were invited by general solicitation. Whether a particular social-media post, podcast or open webinar qualifies depends on the facts. Rule 506(c) permits general solicitation, but every purchaser must be accredited and the issuer must take reasonable steps to verify that status. A sponsor with an established investor network may prefer 506(b). A sponsor who wants to market broadly accepts verification work and an accredited-only investor base.

Options

Rule 506(b). There is no limit on the number of accredited investors. The offering may also include no more than 35 non-accredited purchasers in any 90-calendar-day period. Each non-accredited purchaser, alone or with a purchaser representative, must have enough knowledge and experience in financial and business matters to evaluate the investment, or the issuer must reasonably believe so. If any non-accredited investor purchases, Rule 502(b) requires specified disclosure, including financial-statement information, a reasonable time before sale.

Rule 506(c). General solicitation is allowed, all purchasers must be accredited, and the issuer must take reasonable steps to verify their status. Rule 506(c)(2)(ii) lists non-exclusive verification methods for natural persons, including:

• reviewing IRS forms for the two most recent years (income test);
• reviewing specified asset and liability documents dated within the prior three months (net-worth test);
• obtaining a written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a certified public accountant.

In a no-action letter dated March 12, 2025, the staff of the SEC’s Division of Corporation Finance accepted a further approach, based on the facts in the request letter submitted on March 6, 2025. That request described minimum investments of $200,000 for natural persons and $1,000,000 for legal entities. For an entity accredited only because all of its equity owners are accredited, the same minimums applied to each owner’s investment commitment to the entity. The staff agreed that an issuer could reasonably conclude it had taken reasonable steps to verify accredited status where all of the following apply:

• the purchaser meets the minimum investment amount;
• the purchaser represents in writing that it is accredited and that the minimum is not financed in whole or in part by any third party for the specific purpose of making the investment;
• the issuer has no actual knowledge that any of those facts is untrue.

The staff’s response states that it “has no legal force or effect” and reflects staff views only.

Rule 504. Rule 504 permits up to $10 million in a 12-month period. It is not available to Exchange Act reporting companies, investment companies, or development-stage companies that have no specific business plan or whose plan is to merge with an unidentified company. Unlike Rule 506 securities, which are “covered securities” under Securities Act Section 18(b)(4)(F), Rule 504 securities are not covered securities, so state registration requirements still apply and state analysis is central.

Filings. Rule 503 requires a Form D within 15 calendar days after the first sale, with amendments for certain changes, material mistakes and annually while the offering continues. Section 18 preserves state notice filings and fees. In Texas, the State Securities Board requires a copy of the Form D and a fee (one-tenth of one percent of the offering, capped at $500) within 15 calendar days after the first Texas sale. Other investor states have their own requirements.

A pending development. On September 30, 2026, the SEC requested public comment on whether to designate additional credentials as qualifying natural persons for accredited-investor status. The credentials include a CPA license, the CFA charter, CFP certification, FINRA Series 79 and 86/87, and an exam to be developed by FINRA. Comments are due December 4, 2026. These are not effective rules.

Pitfalls

1. Paying for introductions. Paying someone transaction-based compensation for introducing investors raises broker-dealer registration questions under Section 15(a) of the Securities Exchange Act. The Texas State Securities Board states that, for Rule 506 offerings, no commission or other remuneration may be paid to a person who solicits investors in Texas unless that person is licensed in Texas as a dealer or agent. Paid solicitors are also covered by the bad-actor rule.
2. Skipping the bad-actor inquiry. Rule 506(d) disqualifies an offering if certain covered persons have specified disqualifying events. Covered persons include the issuer, its directors, executive officers and other officers participating in the offering, general partners or managing members, owners of 20% or more of its voting equity, promoters and paid solicitors. The reasonable-care exception requires factual inquiry, which should be documented before marketing begins.
3. Mixing 506(b) and 506(c) messaging. Rule 152 governs integration of offerings. After general solicitation, an issuer relying on an exemption that prohibits it must reasonably believe each purchaser was not solicited that way or had a substantive relationship with the issuer before that offering began. A 506(c) communication plan should not be reused in a 506(b) offering.
4. Deck economics that differ from the documents. Rule 10b-5 prohibits untrue statements of material fact, and omissions that make statements misleading, in connection with the purchase or sale of any security. It applies under every exemption. Fees, preferred returns and waterfalls should match across the deck, PPM and operating agreement.
5. Leaving the filing clock unplanned. Federal and Texas deadlines run from the first sale; when that occurs should be settled with counsel.

Sponsor readiness checklist

Review this list with counsel before preparing a deck. It is a discussion aid, not a compliance program or a form for execution.

• Exemption selected (506(b), 506(c), 504 or another), with the reasons recorded.
• Communication plan consistent with that exemption, covering the website, social media, webinars, podcasts and press.
• Existing investor relationships documented if 506(b) is contemplated.
• Verification method chosen if 506(c) is contemplated.
• Every person who will introduce investors identified, with their compensation and registration or licensing status reviewed.
• Bad-actor questionnaires sent to all covered persons and responses reviewed.
• Sponsor fees, preferred return, promote and waterfall reconciled across the model, the operating agreement and the PPM.
• Use of proceeds and affiliate payments identified for disclosure.
• Investor states identified, with federal and state notice-filing deadlines calendared.
• Subscription documents, accredited-investor questionnaire and resale-restriction legends prepared.
• Projections reviewed for assumptions, basis and cautionary language.
• A person designated to approve all investor-facing materials before use.

General information only; not legal advice. Reading this article does not create an attorney-client relationship. The application of these rules depends on specific facts.