If you’re an international investor, but interested in investing in companies raising on US-based equity crowdfund platforms, can you invest? Although some platforms accept money from foreign investors, the answer to whether foreign investors can and should invest is more nuanced. 

Can International Investors invest in US-Based Equity Crowdfunding Offerings?

In the US, there are three primary securities exemptions where you can publicly solicit investments online: Reg D 506(c), Reg A+, and Reg CF. There are different rules with each exemption and each platform has different rules around accepting international investors. The short answer is that it depends on whether or not foreign investors can invest in US-based equity raises.

US-based platforms must comply with US securities regulations and regulators (SEC and FINRA) as well as foreign securities laws relating to any investor outside the US. Platforms must comply in every jurisdiction in which they want to accept funds. For the platforms that do accept foreign investors, foreign investors should be cautious of whether they should invest money into US-based raises because of the questions around legality and regulation.

International Investors in Regulation Crowdfunding (Reg CF)

There is nothing in Reg CF that explicitly prohibits international investors from investing in US-based companies. However, international investors must always comply with their local laws and regulations. Because of this certain cities or countries may ask funding portals not to accept investments from investors in their jurisdiction.

Can Non-US Companies Raise Capital Under Reg CF or Reg A?

If you are an international company looking to raise capital under Reg CF, then the answer is no – you cannot raise capital under Reg CF. Technically speaking, Reg CF is only available to US-based entities. It is possible that a company could create a US-subsidiary to raise capital under Reg CF; however, there are still restrictions around having the principal place of business located in the US, along with other questions that may help determine whether there is a “co-issuer” of the offering (e.g. will funds be used at the subsidiary level? is the subsidiary a genuine operating company?). Thus, while possible, unless the US subsidiary is truly an operating company with its own employees and use of proceeds, the SEC would not permit a non-US company to simply form a “shell” corporation in the US solely for the purpose of raising capital for a non-US-based enterprise.

Regulation A is a little more open, as it allows both US and Canadian companies to raise capital under that exemption.