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Glossary

Funding portal

What a funding portal is under Regulation Crowdfunding, how it registers with the SEC and FINRA, and what it may and may not do for an issuer.

A funding portal is an online intermediary registered with the SEC and a member of FINRA that hosts Regulation Crowdfunding offerings without being a broker-dealer. Every Reg CF offering must run through exactly one intermediary, and that intermediary is either a funding portal or a registered broker-dealer.

Registration

Section 3(a)(80) of the Securities Exchange Act of 1934, added by the JOBS Act of 2012, created the funding portal category. A portal registers with the SEC on Form Funding Portal under Regulation Crowdfunding and must join FINRA, which applies its own Funding Portal Rules. The SEC and FINRA publish lists of registered portals, which is the quickest way to confirm a platform is what it says it is.

What a portal may not do

A funding portal is a narrower license than a broker-dealer. By statute it may not:

  • offer investment advice or recommendations;
  • solicit purchases, sales, or offers to buy the securities displayed on its platform;
  • pay employees or agents for that kind of solicitation, or based on sales;
  • hold, manage, possess, or handle investor funds or securities.

The last point is why investor money in a portal-hosted offering sits with a qualified third party, usually a bank, until the offering closes. See escrow.

Within those limits a portal may curate which offerings it hosts, highlight offerings on objective criteria, provide communication channels, and advise an issuer on the structure and content of its offering.

What a portal must do

The intermediary carries several of Reg CF's investor protections. It provides investor education, checks that each investor stays within the Reg CF investment limits, keeps the offering materials public for at least 21 days before any sale, runs the comment channel, sends notices of commitments and material changes, and administers cancellations and reconfirmations. See investment-cancellation, rolling-close, and oversubscription.

Why it matters to marketing

A portal cannot solicit investors for an issuer, so the audience has to come from the company. The portal also owns the checkout and its records, so tracking a paid campaign through to a completed investment depends on what the portal lets the issuer measure. See cross-domain-tracking and investor-acquisition.

Further reading

This page is general information about securities rules, not legal advice. Whether a platform fits a particular offering is a question for the company's securities counsel.

Topics:glossarycrowdfundingregulation

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