Should you do a Reg A+ if you have never done a Reg CF?

If you cannot yet prove that people who have never heard of you will send you money for equity, run a Reg CF first. If you already have that proof, from a prior raise, a large engaged customer base, or an investor list that has written checks before, go straight to Reg A+. A Reg CF is not a prerequisite for a Reg A+ and nothing in the rules makes it one. It is a cheap test of the one thing a Reg A+ depends on and cannot fake, and the companies that skip it without evidence are the ones that spend the audit, the legal bill, and months of qualification before finding out the audience was never there.

The question companies think they are asking

Most companies frame this as a sizing question. Reg CF caps at five million dollars in a rolling twelve month period; Tier 2 Reg A+ goes to seventy five million. If the plan needs more than five, the reasoning goes, Reg CF is the wrong tool, so why bother.

That is the wrong question. The right one is whether you have ever demonstrated demand. A raise is a marketing campaign whose product is your stock, and the number that decides it is cost per completed investment. If you have never measured that number, you do not know whether your Reg A+ is a raise or an expensive failure, and no amount of planning changes that. Only a live offering produces the number.

What a Reg CF buys you that money does not

The proceeds are the least valuable thing a first Reg CF produces. The data is the asset.

A real cost per investor. Not a benchmark from a deck, not an agency's guess. Your audience, your creative, your offer, measured on a live checkout. This one number tells you what a Reg A+ budget would have to be and whether the economics close at all.

Creative that has been tested. Which story converts, which video holds attention, which subject line gets the reservation list to act. A Reg A+ opens with a warm audience or it spends its first month recovering, and the difference is usually whether the creative was tested somewhere first.

The conversion rate of your own list. Companies routinely assume a large share of their customers will invest. A Reg CF tells you the actual percentage, and it is almost always smaller than the assumption. Better to learn that on a five million dollar raise than to plan a fifty million dollar one around it.

A working funnel and working tracking. The intermediary sits on a different domain, attribution has to be wired deliberately, and the first time you discover that is not the time you want to be spending Reg A+ money.

A cap table with strangers on it. A later Reg A+ investor is being asked to believe in a company; a company that other members of the public already backed is easier to believe in. The audience you build in the Reg CF, the investors, the reservation list, the people who almost invested, carries forward. That is the thing you are actually buying.

The cost asymmetry is the whole argument

Compare what a stalled raise costs under each exemption.

A Reg A+ that stalls has already paid for audited financials, securities counsel, the offering circular, and the months of SEC review before the first dollar arrives. Tier 2 then carries ongoing reporting whether the raise worked or not. See what-is-reg-a-plus for the timeline. The evidence that the audience was not there arrives at the most expensive possible moment.

A Reg CF that stalls has cost comparatively little. Form C does not go through SEC qualification; the offering can open shortly after filing. The financial statement requirement scales with the raise: below about a hundred and twenty four thousand dollars the officer certifies them, up to about six hundred and eighteen thousand they are reviewed, and audited statements are required only above about one and a quarter million for a first time issuer. Launch is measured in weeks. And it tells you exactly the same thing the stalled Reg A+ would have told you, for a fraction of the price.

The honest counterargument

A Reg CF is not risk free, and it is not private. The offering, its progress, and its result are public data points that live on the intermediary's site and in your Form C filings. A raise that visibly underperformed is harder to follow with a bigger one, because the next round's investors can look it up, and so can the next agency, the next broker-dealer, and the reporter who covers your launch.

So do not run one you are not prepared to market. Which leads to the trap.

The trap: a dress rehearsal you phone in

Companies that treat the Reg CF as a rehearsal tend to under-market it. Small budget, borrowed creative, no real list building, a soft launch to see what happens. Then it raises a modest amount and they conclude the audience is weak.

It measured your effort, not your audience. An under-marketed Reg CF produces bad data, not cheap data, and then you make the Reg A+ decision on a number that means nothing. If you run a Reg CF as a test, run it properly: real testing-the-waters, a reservation list built before launch, creative variations with budget behind them, and tracking verified before the first ad goes live. The point of the test is the quality of the reading.

When to skip it

Some companies already have the evidence, and for them the detour is a detour.

• A large, engaged customer base that has already shown it buys what you sell repeatedly and responds when you email it. You still do not know its investment conversion rate, but you know enough to size the risk.
• An existing investor list of people who have written checks to you before, which is different from a list of people who said they would.
• Prior raise experience in this company or a previous one, with the numbers to show for it.
• A financing need the Reg CF cap cannot dent. If the project needs sixty million, five million in a twelve month window is a distraction, and the right structural answer is more often a Reg A+ with a Reg D alongside, covered in reg-a-plus-and-reg-d-at-once.

Even then, be honest about which category you are in. "We have a lot of customers" is not the same as "we have proven that customers invest."

What the sequence looks like in calendar terms

Run the Reg CF as a full campaign: a testing-the-waters window, a launch into a warm list, a closing push, and a proper read of the numbers afterward. Then use what it produced. The investors and the reservation list become the opening audience of the Reg A+. The winning creative becomes the starting point rather than the guess. The cost per investor becomes the budget model. Meanwhile counsel and the auditors do the Reg A+ preparation, which takes months regardless, so the two tracks overlap rather than stack.

Whether and how a completed Reg CF affects the later Reg A+, including integration of the two offerings, disclosure of the prior raise, and what it does to the cap table, is a question for your securities counsel, and the answer depends on your facts. Ask it before the Reg CF opens, not after.

The binding constraint on almost every raise is demand, not the statutory ceiling, which is the same argument we made about the Tier 2 cap in reg-a-plus-improvement-act-150m-cap. A Reg CF is the cheapest way to find out how much demand you actually have.

This is general information about two securities exemptions, not legal advice. Which exemption fits your company, and how one offering affects another, are questions for your own securities counsel and your intermediary.

FAQ

Do you need to do a Reg CF before a Reg A+?

No. Nothing in the rules requires it, and companies go straight to Reg A+ all the time. The reason to run a Reg CF first is evidence: it is the cheapest way to prove that the public will invest in your company and to learn what that costs, before committing to Reg A+ audit, legal, and qualification expense.

Can a company do both a Reg CF and a Reg A+?

Yes. Many companies raise under Reg CF first and follow with a Reg A+ later, and the audience built in the first raise is often the opening audience of the second. How the two offerings interact, including integration and disclosure of the earlier raise, is a question for securities counsel.

How long should you wait between a Reg CF and a Reg A+?

There is no fixed waiting period in the rules. In practice the Reg A+ preparation, audit, and SEC qualification take months, so companies usually start that work while the Reg CF is closing or shortly after, and launch the Reg A+ into the audience the Reg CF built. Your counsel will advise on timing given your offerings.

How much does it cost to start a Reg A+?

Materially more than a Reg CF, and most of it is spent before any money comes in: audited financials for Tier 2, securities counsel for the Form 1-A offering statement, the SEC review, and the ongoing reporting afterward. Exact figures depend on the company. The point is that the cost is front loaded, which is why proving demand first matters.

How much can you raise with a Reg CF?

Up to five million dollars in a rolling twelve month period, through a single registered funding portal or broker-dealer. Non-accredited investors are limited in how much they can invest across all Reg CF offerings in a twelve month period, based on their income and net worth.