In May 2025, the U.S. Securities and Exchange Commission issued a report entitled “Analysis of Crowdfunding Under the JOBS Act” by Angela Huang and Vladimir Ivanov, economists in the Commissions Division of Economic and Risk Analysis. This report analyzes nearly a decade of securities-based crowdfunding activity under Title III of the JOBS Act, which created Regulation Crowdfunding (Reg CF). Effective since May 16, 2016, Reg CF allows small U.S. businesses to raise capital online from the public, including non-accredited investors, without registering with the SEC, provided they comply with specific requirements.
Summary of Findings
Regulation Crowdfunding has carved out a niche in startup financing by enabling small companies to raise modest sums from a broad base of retail investors. Despite its modest scale relative to other exemptions, it offers a democratized capital-raising pathway. Most issuers remain small and pre-profit, though a small subset have achieved acquisitions, venture backing, or IPOs. The market remains dominated by a handful of leading portals and continues to evolve in structure and participation.
Overall Market Activity
Between 2016 and the end of 2024:
- 8,492 offerings were initiated by 7,134 unique issuers (excluding 990 withdrawn offerings).
- Collectively, issuers sought to raise $560 million in target minimums and $8.4 billion in maximums.
- 3,869 offerings reported raising $1.3 billion in proceeds, though actual amounts may be higher due to underreporting in Form C-U filings.
Most offerings were structured with a minimum-maximum format, and 98% accepted oversubscriptions, enabling issuers to raise more than the minimum target.
Issuer Profile
Issuers were typically early-stage startups and small businesses:
- Median assets: $79,400, Cash: $13,200, Debt: $60,400
- Median revenue: $9,800, Median net loss: $32,400
- Median number of employees: 3
- 58% had been formed within the past three years.
Only about 14% of issuers reported positive net income, underscoring the use of Reg CF primarily by pre-profit ventures.
Securities and Offering Structure
- 43% of offerings issued equity, 31% debt, and 25% SAFEs (Simple Agreements for Future Equity).
- The median offering duration was four months, with the average maximum raise of ~$1 million.
- The rise in activity after 2021 was likely driven by regulatory amendments that raised the offering cap to $5 million and simplified issuer disclosure thresholds.
Geographic Trends
49% were incorporated in Delaware, with the rest in California (24%), New York (9%), Texas (7%), Florida (7%) and Pennsylvania (4%).
Issuers were spread nationally, but activity concentrated in:
- California (24% of offerings; 31% of proceeds)
- New York, Texas, and Florida were also leading states.
Nearly half of all offerings originated from the top five states, reflecting a strong correlation between population density, startup activity, and Reg CF adoption.
Intermediary Landscape
- By 2024, 83 funding portals were registered with the SEC and FINRA, although many had exited the market.
- Intermediaries are required by law to host offerings, verify investors, and prevent fraud.
- The market was highly concentrated:
- Top 5 portals (e.g., Wefunder, StartEngine, Republic) accounted for 70% of offerings and 75% of reported proceeds.
Fees and Compensation
- Average total commission (cash + securities): 7.3–7.8% of proceeds.
- Including flat fees, total intermediary compensation averaged 7.7–8.1% of the capital raised.
- About 33% of intermediaries took securities as part of their compensation.
Follow-On Financing and Outcomes
- 25% of issuers also filed a concurrent offering under Regulation D, Rule 506(c) to tap accredited investors.
- Only ~1% of issuers filed registration statements or became Exchange Act reporters.
- Outcomes among successful issuers:
- 0.25% completed IPOs
- 2.2% were acquired
- 3.4% secured later venture capital
