The buzz in the investment crowdfunding industry these days is all about when will the SEC increase the funding limit of JOBS Act Crowdfunding (aka equity crowdfunding) from $1.07M dollars to $5M. Rumor has it that there has been a flood, a FLOOD, of RegCF platform applications in anticipation of the $5M limit increase. Why is raising the maximum that a business can raise under RegCF rules to $5M so important? It’s not. 

I know you’re busy so I’ll leave you to consider the following reasons why a $5M limit is misleading and the basis for the most abusive bit of narrative economics within the crowdfunding industry, the random investor limits on retail investors.  

By “increasing” the limit to $5M it reinforces the idea of unaccredited vs accredited investors. Meaning, “unaccredited” and “accredited” investors are randomly manufactured designations that predate nearly everyone reading this except Irwin Stein, the internet and the technology that enables safe and secure investment crowdfunding.  To put it in another way, both unaccredited and accredited investors can go to the casino and gamble away their mortgages or to the corner store and invest their salary in lottery tickets. However, those same “unaccredited” Americans are supposedly not educated enough to make their own investment crowdfunding decisions. This form of paternalistic patronizing in the investment world needs to end, immediately. If the public can be called upon to bailout entire industries every decade or so, they're clearly sophisticated enough (along with modern due diligence tools, techniques and communities) to make their own investment decisions.

Raising the RegCF limit doesn’t make it easier to attract investors. So called “unsophisticated” retail investors are still limited to the same arbitrary investment limits. For most Americans they’re limited to being able to legally invest ~$2.2k annually. Raising the RegCF maximum raise ceiling does not enable THE CROWD to invest more. No. Rather it puts an additional onus on issuers (business women and men) to reach an even larger audience in order to achieve the new randomly selected $5M threshold. To sum it up, the $5M limit for RegCF is like inviting investors to an all you can eat buffet, then limiting them to one trip to the buffet line and giving them a teacup as a plate. 

As a startup or small business owner the key to investment crowdfunding isn’t how much you can raise using RegCF or any exemption. The key to successful investment crowdfunding is the crowd. For instance, if you can’t engage a crowd to raise $100k or $1M don’t worry about $5M. When people say, “Oh, there will be more liquidity by raising the RegCF limit to $5M”, those “people” are probably VCs or angel investors looking to perpetrate the same exploitative ethos that venture capital is infamous for. Because that is the thing about investment crowdfunding. The key to crowdfunding isn’t the limit, it's the crowd. Raising the limit to $5M doesn’t magically make it easier to get your deal in front of the investor eyeballs needed to raise $5M. In many ways the $5M narrative sets you up to be perceived as a failure. “Oh, so and so ONLY raised $1M or $1.5M or $3M.” More likely, you’ll only raise $270k, which is the average raise of RegCF deals and more in line with the funding needs that Main Street businesses need to grow successful local businesses. 

Will the $5M RegCF limit hurt the investment crowdfunding industry? As an eternal optimist I’ll say let's wait and see as that isn’t the real question. The real question is, “How will the $5M threshold help attract more retail investors to your deal?” Now that is a million dollar question. 

In the meantime, regardless of how much you can aspire to raise, focus on building your crowd or as I like to call it, loyal customer base. And be aware of being duped into biting off more than you can chew. Raised money isn’t earned and you have to pay it back. Consider using investment crowdfunding to turn your customers into investors. Your customers have more money than your investors. After all, who do you think pays your investors back? Customers not only pay your investors back, without your customers you can’t create a sustainable business and legacies for you, your crowdfunding-investors and your community. 

In summary, focus on delivering the products your customers need. After all, revenue is the best capital in the world.


For more information on regulated, JOBS Act equity, debt and investment crowdfunding visit the Crowdfunding Professional Association website at 


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