Today, Crowdfund Capital Advisors submitted a formal petition to SEC Chairman Paul Atkins requesting a significant change to Regulation Crowdfunding: raising the maximum offering limit from $5 million to $20 million, with automatic inflation indexing.
This isn’t just a policy wish list item. It’s backed by nearly a decade of transaction-level data showing that the current cap is fragmenting capital formation without providing meaningful investor protection benefits.
The Current Cap Is a Ceiling, Not a Safeguard
When the $5 million limit was set in 2021, it made sense for a nascent market that had proven itself beyond the initial $1 million cap. But Reg CF has matured dramatically. We’ve now tracked over 8,800 issuers and more than $3.2 billion in capital formation through our CCLEAR database—the most comprehensive transaction-level dataset on Regulation Crowdfunding in existence.
What does that data tell us? Companies hitting the cap aren’t stopping. They’re coming back.
The Numbers Tell the Story
Our analysis of issuers that approached the current cap (raising $4–5 million in a single offering) reveals a clear pattern:
- 40.3% returned to the Reg CF market for follow-on offerings
- 20 months was the median time to first follow-on—consistent with normal business growth cycles
- $3.1 million was the median additional capital raised after hitting the cap
- $214+ million has been raised in aggregate by issuers who initially maxed out
- 29.4% of these companies raised at least $1 million more in subsequent Reg CF rounds
This isn’t evidence of issuers being appropriately constrained. It’s evidence of artificial fragmentation—companies forced to run multiple offerings when a single, consolidated raise would be more efficient for everyone involved.
Why $20 Million (Not $10 Million)
A modest bump to $10 million would simply recreate the same problem at a higher threshold. The companies most constrained by the current cap are often post-revenue, customer-rich, and operationally mature. They’re seeking $10–20 million to fuel growth—capital that’s increasingly difficult to access through traditional venture channels given continued market pullback.
Reg CF’s unique advantage is that it lets companies raise from their customers and communities. That advantage scales with company maturity. A $20 million cap would enable Series A and smaller Series B-scale raises while keeping the existing disclosure, intermediary, and investor-protection framework fully intact.
A Decade of Investor Protection Success
Let’s be clear about what hasn’t happened: systemic fraud, widespread investor harm, or regulatory disaster. Reg CF has operated for nearly ten years with rare enforcement actions and no evidence that retail investors are being systematically victimized.
The standardized disclosures under Form C and Form C-AR create transparency that simply doesn’t exist in other exempt markets. Expanding Reg CF extends these benefits rather than diminishing them.
A Note on Data Quality
One reason we’re confident in these findings: we built the infrastructure to track it properly. The SEC’s publicly reported statistics rely on EDGAR filings, including Form C-U progress updates. But Form C-U compliance has been inconsistent since day one, creating systematic underreporting.
CCLEAR corrects for this by tracking every offering and investment at the transaction level, including instances where issuers run concurrent exempt offerings (like combining Reg CF with Rule 506(c)) as part of a single financing round. This gives us a more accurate picture of how companies are actually raising capital—and why the current cap is forcing unnecessary complexity.
What We’re Asking For
The petition requests two straightforward changes:
- Increase the Reg CF offering limit to $20 million in any 12-month period
- Index the limit to inflation to preserve its real value over time
The SEC has clear authority under Section 3(b) of the Securities Act to make this adjustment. The data supports it. The market is ready for it.
Read the Full Petition
You can read our complete petition to the SEC here. We’ve laid out the empirical case, the regulatory rationale, and the path forward for a more efficient capital formation framework that continues to protect investors while giving growing companies the room they need.
Sherwood Neiss is Principal at Crowdfund Capital Advisors, co-author of the JOBS Act crowdfunding framework, and creator of the CCLEAR database tracking Regulation Crowdfunding market activity.
