On April 10, 2025, I had the privilege of representing Kingscrowd at the SEC’s 44th Annual Small Business Forum in Washington, D.C. As a featured speaker on the “Out of the Blocks: Strategies and Trends in Early-Stage Capital Raising” panel, I shared insights on how Regulation Crowdfunding (Reg CF) has evolved since its inception and where it needs to go next.

The Current State of Reg CF in 2025

Since launching in 2016, Regulation Crowdfunding has facilitated over 8,700 campaigns that have collectively raised more than $2.2 billion from over 2 million investors. These numbers showcase the growing appetite for democratized access to private markets. However, despite this success, we’re still only scratching the surface of what’s possible.

In my role as Vice President of the Crowdfunding Professional Association (CfPA), I’ve been working alongside industry colleagues to identify concrete improvements to the regulatory framework. At the SEC forum, I had the opportunity to present several key policy recommendations that could significantly enhance capital formation while maintaining robust investor protections.

The Critical Issue: One Size Does Not Fit All

One observation I emphasized—which hasn’t received enough attention—is that Regulation Crowdfunding isn’t a one-size-fits-all solution. Right now, we’re forcing two fundamentally different types of businesses into the same regulatory framework:

  • Main Street small businesses seeking modest amounts ($50K-350K) to steadily grow or sustain their operations—think local restaurants, shops, or service providers integral to their communities.
  • High-growth startups raising millions, often venture-backed (or with aspirations to be so), with the potential for substantial scale and significant returns—businesses aiming to become tomorrow’s unicorns.

Because we treat these distinct categories the same under Reg CF, we encounter friction and misunderstanding from both ends:

  • VCs and traditional angels frequently critique Reg CF as “uninvestable” and “not venture scale”, labeling crowdfunding companies as second-rate businesses that failed to attract traditional investment and are often overvalued.
  • Small business and Main Street advocates initially saw the promise of Reg CF but now frequently voice frustration, saying it’s “a failure” because the economics of crowdfunding platforms predominantly cater to startups raising large sums. For smaller businesses, the platform, legal, and compliance costs eat disproportionately into their modest fundraising goals, making Reg CF impractical.

Both groups make valid points—but these critiques arise precisely because we’re trying to serve two vastly different markets with one compromised regulatory framework.

By explicitly acknowledging the dual nature of Reg CF and introducing targeted regulatory improvements on both ends—the “low end” to simplify requirements and reduce costs for small businesses, and the “high end” to increase caps and attract higher-quality startups—we can better serve both segments. Doing so will encourage greater investor participation, broaden investment opportunities, and ultimately grow the overall crowdfunding market.

Key Policy Recommendations

To address these challenges, I presented several policy recommendations at the forum — derived from the Crowdfunding Professional Association’s (CfPA.org) board-approved policies:

1. Introduce a “Micro-Exemption”

For small businesses raising smaller amounts of capital (e.g. up to $350,000), we need to simplify disclosure requirements dramatically. For example, current legal and accounting costs alone (excluding platform fees, which can range from 3-12%+) can run tens of thousands of dollars—a significant chunk of smaller raises. In 2024, the median Reg CF raise was $114,000; substantial portions of such raises currently go toward these fees, severely limiting the capital available for business growth.

A micro-exemption would:

  • Reduce financial disclosure requirements, allowing simpler, non-GAAP financials for cash-basis businesses.
  • Simplify ongoing reporting obligations.
  • Lower overall compliance costs.
  • Ensure more funds directly support business growth rather than fees.

2. Raise the Reg CF Cap to $20 Million

At the opposite end of the spectrum, high-growth companies remain constrained by the current $5 million Reg CF cap. Specifically, when the cap increased from $1.07 million to $5 million in 2021, we observed an immediate improvement in issuer quality—with more post-revenue, higher-traction, and venture-backed startups leveraging Reg CF. Given that nearly 80% of Regulation A raises have been under $10 million, increasing the Reg CF limit to $20 million would likely attract even more high-quality issuers, providing investors greater opportunities to participate in substantial growth rounds alongside professional venture investors, and at a lower cost of capital to issuers.

Increasing the cap would:

  • Attract higher-quality, growth-oriented companies.
  • Expand investment opportunities for retail investors.
  • Allow companies sufficient capital for meaningful growth and expansion.
  • Further enhance the overall reputation and appeal of Reg CF.

3. Simplify Confusing Regulatory Framework

The current rules governing investor limits and permissible promotional activities are overly complex and difficult to follow. For instance, calculating individual investment limits involves cumbersome formulas tied to income and net worth, creating confusion for investors. Likewise, current restrictions on issuer advertising—such as differentiating between “terms” and “non-terms” advertising—are impractical and outdated.

Proposed simplifications include:

  • Aligning investment limit calculations with the simpler standards currently used under Regulation A+.
  • Clarifying and modernizing promotional rules to better reflect realistic marketing practices.

The complete set of policy recommendations from the CfPA can be found in our comprehensive policy position paper.

Why Kingscrowd Cares

At Kingscrowd, we’re committed to democratizing private market investing through better data, analysis, and insights. The regulatory improvements we’re advocating for directly support this mission by:

  1. Expanding the universe of investment opportunities – More companies across the spectrum means more diverse opportunities for our users
  2. Improving market efficiency – Clearer regulations lead to better functioning markets
  3. Enhancing data quality – With more appropriate disclosure requirements, we can provide more relevant and useful analysis
  4. Supporting both investor types – Our platform serves both those interested in local business investments and those seeking high-growth opportunities

A Dual-Track Approach: The Path Forward

Rather than continuing with a compromise framework that inadequately serves both markets, I believe we need to explicitly acknowledge the dual nature of Reg CF and create tailored approaches for each:

For Main Street businesses:

  • Simplified, streamlined requirements appropriate to raise size
  • Focus on basic disclosures that matter for local or steady-growth businesses
  • Lower costs of compliance to make smaller raises economically viable

For high-growth startups:

  • Maintain existing disclosure requirements aligned with later-stage funding
  • Higher caps to allow for substantial growth funding
  • Streamlined bridge to other exemptions as companies scale

By embracing this nuance and advocating for targeted policy improvements, we’re helping make online private markets more effective and inclusive for everyone involved – issuers, investors, platforms, and service providers like Kingscrowd.

You can watch the recording of the early-stage business panel (and opening remarks by the SEC Commissioners) here:

Closing Thoughts: An Invitation

Participating in high-level regulatory discussions positions Kingscrowd as a thought leader shaping the future of private capital markets.

By engaging directly with regulators and industry stakeholders, we’re not just observing the evolution of this industry—we’re actively working to drive it forward.

I’m proud to represent Kingscrowd in these important conversations and grateful to the SEC for facilitating this dialogue. The forum’s recording will be available soon on the SEC’s website, and I encourage you to watch it to learn more about the discussions that are shaping the future of early-stage capital raising.

As we continue our work at Kingscrowd, we remain committed to providing the tools, data, and insights that help investors navigate this evolving landscape. Together, we can build a more inclusive, efficient, and opportunity-rich private market ecosystem.