What Is Rule 506(c)?
Direct answerRule 506(c) is a fundraising rule under Regulation D that lets startups publicly advertise their fundraising round.
That means you can talk about your raise on your website, social media, podcasts, demo days, or other public channels. In exchange for that flexibility, every investor who invests must be an accredited investor. They must also be verified as accredited before their investment is accepted. Simply asking them to check a box is not enough.
Unlike Rule 506(b), Rule 506(c) does not allow non accredited investors to participate.
For founders, choosing Rule 506(c) is a tradeoff. You gain the ability to publicly market your raise, but you also take on additional work to verify every investor's eligibility before they invest.
Freedom to promote comes with responsibility
Think of Rule 506(c) as the fundraising path that lets you openly tell people you're raising money.
Instead of relying only on your personal network, you can publicly promote your round and reach a much larger audience.
The tradeoff is that you become responsible for making sure every investor is actually accredited before accepting their investment. That means collecting or reviewing evidence that supports their accredited status instead of simply relying on what they tell you.
If your goal is public fundraising, Rule 506(c) makes that possible. It also requires a more structured investor onboarding process than Rule 506(b).
What the SEC says, and what founders are actually asking
"Rule 506(c) permits the use of general solicitation where all purchasers are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors. Purchasers in a Rule 506(c) offering receive restricted securities, and a company is required to file a notice with the Commission on Form D within 15 days after the first sale."
Rule 506(c) gives you something Rule 506(b) does not: the ability to publicly advertise your fundraising round.
In return, every person who invests must be an accredited investor, and you must take reasonable steps to verify that status before accepting their investment. You also generally need to file Form D within 15 calendar days after the first sale in the offering.
The key difference is simple.
Rule 506(b) limits how you find investors but has a lighter accreditation process.
Rule 506(c) lets you publicly promote your raise but requires stronger investor verification
A recurring answer from experienced founders and startup attorneys is yes, if the fundraising round relies on Rule 506(c). Unlike Rule 506(b), investors cannot simply state that they are accredited. The founder must take reasonable steps to verify it, often through documentation or a qualified third-party verification service.
Many founders understand that Rule 506(c) requires accredited investors.
What they often underestimate is the amount of organization that comes with verifying every investor before they invest.
The challenge is rarely understanding the rule itself.
The challenge is keeping investor records, verification documents, fundraising progress, and filing deadlines organized while the round is moving quickly.
Keep verification moving with your fundraising
A Rule 506(c) fundraising round involves more than finding investors. It also means keeping track of who has completed verification, who is still waiting, and when each investor is ready to move forward.
Cairnul keeps that workflow organized.
When founders create a Rule 506(c) fundraising round, investor onboarding follows the requirements of that exemption. Investor records, accreditation status, verification documents, SAFE agreements, fundraising milestones, and Form D preparation stay connected to the same round instead of being scattered across emails, spreadsheets, and shared folders.
As each investor progresses through the process, the fundraising workflow updates alongside them, making it easier to see what has been completed and what still needs attention before accepting an investment.
Instead of manually tracking dozens of moving pieces, founders manage one organized fundraising workflow from start to finish.
Many founders choose Rule 506(c) because they want the freedom to publicly talk about their fundraising round.
What often gets overlooked is that advertising is only one part of the rule.
Every investor must still complete the verification process before investing.
As more investors join the round, keeping verification records, documents, and investor progress organized quickly becomes just as important as finding investors in the first place.
Prepare before you go public
Decide whether public fundraising is important for your round.
Confirm that every intended investor must be an accredited investor.
Establish a process for accredited investor verification before accepting investments.
Keep investor verification records together with the rest of your fundraising documents.
Track important fundraising dates, including your Form D filing deadline after the first sale.
Keep investor onboarding, documents, and fundraising milestones organized in one workflow throughout the round.
Frequently asked questions
Yes.
Rule 506(c) allows founders to publicly advertise their fundraising round through channels like websites, social media, podcasts, conferences, and other public communications.
Yes.
Every investor in a Rule 506(c) offering must be an accredited investor. Non-accredited investors cannot participate.
No.
Rule 506(c) requires founders to take reasonable steps to verify accredited investor status. Simply asking investors to self-certify is generally not enough.
Yes.
Many SAFE rounds rely on Regulation D exemptions, including Rule 506(c). If your SAFE round uses Rule 506(c), the accredited investor verification requirement still applies.
Rule 506(b) does not allow public advertising, but accredited investors generally self-certify their status and some non accredited investors may participate up to 35 non-accredited investors.
Rule 506(c) allows public advertising, but every investor must be accredited and verified before investing.
Run a public fundraising round with greater clarity.
Cairnul helps founders organize investors, documents, and compliance in one place, so the whole raise stays clear from first sale to close. Join the waitlist to be among the first founders to run a cleaner, more organized round.
Join the waitlistDisclaimer. This content is provided for educational purposes only and does not constitute legal, tax, or investment advice. Fundraising rules, filing requirements, and fees may vary by jurisdiction and change over time. Always confirm current requirements with qualified counsel or the relevant regulator.