Equity Crowdfunding Glossary
Plain-language definitions of the terms you’ll meet across equity crowdfunding and private capital.
Regulations & exemptions
Offerings & filings
Securities & deal terms
Investors & compliance
Platform, process & administration
Regulations & exemptions
Regulation Crowdfunding (Reg CF)
An SEC exemption that lets a company raise up to $5 million in a 12-month period from the general public, both accredited and non-accredited investors, through a registered funding portal or broker-dealer.
Regulation A / Reg A+
An SEC exemption often called a “mini-IPO.” It allows companies to raise from the public, with Tier 1 up to $20M and Tier 2 up to $75M per year, after SEC qualification.
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Regulation D
A private-placement exemption for raising an unlimited amount, primarily from accredited investors. Rule 506(b) bars general solicitation; 506(c) permits it but requires verifying accreditation.
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JOBS Act
The 2012 Jumpstart Our Business Startups Act, the federal law that created Regulation Crowdfunding and expanded Regulation A.
Rule 12g-6 (the “12(g)” exemption)
A conditional SEC exemption that lets Reg CF issuers avoid Exchange Act registration despite many holders of record, provided they meet its conditions, including using an SEC-registered transfer agent.
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Rule 3a-9 (crowdfunding vehicle)
The SEC rule permitting a qualifying crowdfunding vehicle (a type of SPV) to pool Reg CF investors into one entity, so the operating company keeps a single, clean cap-table entry.
Blue sky laws
State-level securities laws. Federal exemptions like Reg CF and Reg A Tier 2 generally preempt state registration, though notice filings and fees may still apply.
Bad actor disqualification
SEC rules that bar an offering from using certain exemptions if a covered person has a disqualifying legal or regulatory history.
Offerings & filings
Form C
The disclosure document a company files with the SEC to launch a Reg CF raise, covering the business, offering terms, financials, and risks.
Form C amendments (C/A, C-U, C-AR, C-TR)
Related Reg CF filings. C/A amends a live offering, C-U reports progress and closing, C-AR is the annual report, and C-TR terminates reporting.
Form 1-A
The offering statement a company files with the SEC for a Regulation A offering. The SEC must qualify it before sales can begin.
Form D
A brief notice filing made with the SEC after a company sells securities under Regulation D.
Offering (campaign)
A specific fundraising round conducted under an exemption, with defined terms, a target amount, and a timeline during which investors can participate.
Subscription agreement
The contract an investor signs to purchase securities in an offering, setting out the amount, price, terms, and representations.
Testing the waters
SEC-permitted activity that lets an issuer gauge investor interest before formally filing, subject to specific rules for Reg CF and Reg A.
Target (minimum) amount
The minimum an offering must raise for the deal to close. Funds are typically held in escrow until the target is met.
Maximum amount & oversubscription
The ceiling an offering may accept. When demand exceeds the target before reaching the max, the raise is oversubscribed.
Contingent (all-or-nothing) offering
An offering that only closes and releases funds if it reaches its target. Otherwise, investors are refunded.
Rolling close vs fixed close
A rolling close lets an issuer accept and disburse funds in stages as commitments arrive. A fixed close settles all investments at a single end date.
Securities & deal terms
Equity / common stock
Ownership shares in a company. Common stock typically carries voting rights and sits behind preferred stock in a liquidation.
Preferred stock
A share class with priority over common stock on dividends and liquidation, often carrying negotiated investor rights.
SAFE
A Simple Agreement for Future Equity: an investment contract that converts into equity at a later priced round, usually governed by a valuation cap and/or a discount.
Crowd SAFE
A SAFE adapted for crowdfunding, where many investors hold standardized terms that convert on a future triggering event.
Convertible note
A short-term debt instrument that converts into equity at a later round, typically with interest, a maturity date, and a valuation cap or discount.
Valuation cap
The maximum company valuation at which a SAFE or convertible note converts into equity, protecting early investors if the priced-round valuation is higher.
Discount rate
A percentage reduction on the price early SAFE or note investors pay when their investment converts, rewarding them for investing sooner.
Pre-money / post-money valuation
A company’s value before (pre) and after (post) new investment. Post-money equals pre-money plus the amount raised.
Dilution
The reduction in existing owners’ percentage stake when a company issues new shares.
Investors & compliance
Accredited investor
A person or entity the SEC permits to invest in certain private offerings, based on income (over $200K, or $300K with a spouse), net worth (over $1M excluding a primary residence), or qualifying credentials.
Non-accredited investor
An investor who doesn’t meet accredited thresholds. They can still invest in Reg CF and Reg A offerings, subject to SEC investment limits.
Reg CF investment limits
Caps on how much a non-accredited investor may invest across all Reg CF offerings in a 12-month period, calculated from income and net worth. Accredited investors have no Reg CF limit.
AML/KYC
The identity and background checks (Anti-Money-Laundering / Know Your Customer) a platform runs on investors before accepting funds, to confirm identity and screen against watchlists.
Accreditation verification
The process of confirming an investor qualifies as accredited, required for Reg D 506(c) offerings.
Suitability / appropriateness
Whether a given investment fits an investor’s financial situation and risk tolerance, a key consideration in speculative private offerings.
Platform, process & administration
Raise page (offering page)
The dedicated page where an issuer presents its investment opportunity, combining story, video, team, traction, and terms so investors can evaluate and invest.
Funding portal
An SEC-registered, FINRA-member intermediary through which Reg CF offerings are conducted. Highlander Crowdfunding operates as a funding portal.
Broker-dealer
A registered firm that can facilitate securities transactions. Some exemptions (Reg A, Reg D) are commonly run through a broker-dealer.
Escrow agent / escrow
A neutral third party that holds investor funds until an offering’s conditions are met, then releases or refunds them.
Transfer agent
Keeps the official record of a company’s securities holders. For Reg CF issuers, an SEC-registered transfer agent helps satisfy the 12(g) conditional exemption.
Cap table (capitalization table)
The record of who owns a company’s equity, plus how much, what type, and at what price. It updates whenever shares are issued, transferred, or converted.
SPV (special purpose vehicle)
A separate legal entity that pools multiple investors into a single line on a company’s cap table. In crowdfunding, a qualifying vehicle under Rule 3a-9 keeps one clean cap-table entry.
Investor updates
Periodic reports issuers share with their investors after a raise, covering progress, milestones, and financials.
Perks
Non-security incentives (discounts, products, early access) that some issuers offer investors as a thank-you.
Disbursement (closing)
The point at which escrowed funds are released to the issuer after an offering meets its conditions, and securities are issued.
Due diligence
The review process, by the platform and by investors, to assess an issuer’s disclosures, business, and risks before investing.
Keep reading
Start a track: Investing 101
- 01What Is Equity Crowdfunding?
- 02Why Invest in Startups Through Equity Crowdfunding?
- 03What Are the Risks of Equity Crowdfunding?
- 04How to Evaluate a Startup Investment
- 05Is Equity Crowdfunding Right for You?
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