Crowdfunding & Investment Terms
Plain-English definitions for investors, issuers and crowdfunding professionals. Start with the people involved, compare offering rules, or look up the terms in an investment.
Content reviewed October 25, 2026. These brief explanations are educational. The offering documents and applicable rules determine an investment’s terms and requirements.
People & platforms
Crowdfunding
Raising funds from many people, often online. Investment crowdfunding offers securities; donation and reward campaigns involve different rights and expectations.
Angel investor
An individual investing personal capital in a business, often at an early stage. An angel may invest alone or alongside other investors.
Accredited investor
An investor who meets a category in SEC Rule 501(a). Individuals may qualify through financial criteria, certain professional credentials or specified roles; entities have separate tests. See the SEC’s qualification overview.
Non-accredited investor
An investor who does not meet an accredited-investor category. Non-accredited investors can participate in Reg CF offerings, subject to investment limits.
Issuer
The company or other entity offering the security. The issuer is responsible for its offering disclosures and applicable reporting.
Intermediary
The registered funding portal or broker-dealer through which a Reg CF offering takes place.
Funding portal
A registered Reg CF intermediary with a limited role. Funding portals cannot give investment advice or recommendations, or hold investor money or securities. Check FINRA’s directory.
Broker-dealer
A securities firm whose registered activities may include arranging transactions for customers or trading for its own account. Broker-dealers can also facilitate Reg CF offerings.
Offering rules
Regulation Crowdfunding (Reg CF)
A securities-registration exemption allowing eligible companies to raise up to $5 million in a 12-month period through a registered online intermediary. It permits accredited and non-accredited investors. SEC Reg CF overview.
Regulation A (Reg A / Reg A+)
An offering exemption with two tiers, each with its own requirements. An offering statement must be qualified by the SEC before sales begin. Qualification is not an endorsement. Compare SEC offering exemptions.
Regulation D (Reg D)
A group of private-offering exemptions. Rule 506(b) prohibits general solicitation. Rule 506(c) permits it when all purchasers are accredited and the issuer takes reasonable steps to verify that status. SEC exemption overview.
JOBS Act
The 2012 federal law that introduced several capital-raising reforms. Title III created the exemption implemented by Reg CF, whose principal rules took effect in May 2016.
Testing the waters
Seeking indications of interest before an offering proceeds. Under Reg CF, pre-filing communications require specific statements and cannot accept money or investment commitments. SEC issuer guidance.
Filings & reporting
EDGAR
The SEC’s public filing system. Use it to find an issuer’s offering documents, amendments, progress updates and annual reports. Search EDGAR.
Form C
The offering statement for a Reg CF raise, including required disclosures about the business, securities, finances and offering terms.
Form C/A
An amendment to a Form C. Material changes during an open offering can require investors to reconfirm their commitments.
Form C-U
A Reg CF filing reporting fundraising progress or the final amount sold, as required.
Form C-AR
The Reg CF annual report, generally due within 120 days after fiscal year-end and posted on EDGAR and the issuer’s website until reporting obligations lawfully end.
Form C-TR
A notice ending Reg CF annual reporting after the issuer meets a permitted termination condition. It does not by itself mean investors received an exit or repayment.
Securities & investment terms
Equity (common and preferred shares)
An ownership interest. Common and preferred shares can carry different voting, dividend and liquidation rights. Read the actual share-class terms.
Debt
Borrowed capital repayable under agreed terms. Check interest, maturity, collateral, payment priority and default provisions; repayment is not guaranteed.
Convertible note
Debt that may become equity under specified conditions. Conversion terms, interest and maturity affect the investor’s outcome.
SAFE (Simple Agreement for Future Equity)
A contract providing rights to future equity if specified events occur. It is not current stock ownership, and conversion may never happen. Read the SEC’s SAFE bulletin.
Valuation cap
A contractual input that can limit the valuation used to calculate conversion of a SAFE or note. It is not a guaranteed company value or return.
Revenue share
An arrangement linking investor payments to a defined measure of revenue. Payment percentages, duration, caps and other conditions depend on the contract.
Capitalization table (cap table)
A record of company ownership and related securities. Check whether an ownership calculation includes options, warrants and convertible instruments.
Valuation, risk & returns
Pre-money and post-money valuation
Pre-money describes a company’s value before new investment; post-money includes that investment. Check the financing documents’ treatment of other securities and conversions.
Dilution
A reduction in an existing investor’s ownership percentage when additional equity is issued or other securities convert.
Target offering amount
The minimum fundraising target stated in a Reg CF offering. Reaching it does not mean the business is fully funded or will succeed.
Escrow
An arrangement in which a third party holds funds pending specified conditions. The offering documents explain when funds are released or returned.
Due diligence
Investigating a business and its offering before investing. Review disclosures, financials, management, risks and security terms, and ask questions.
Liquidity
The ability to turn an investment into cash. Private securities can be difficult or impossible to sell, even after a legal resale restriction ends.
Exit
An event through which an investor may realize value, such as a sale, acquisition or repurchase. Timing, availability and proceeds are uncertain.
Distribution
Cash or other value paid to investors, such as dividends or revenue-share payments. A distribution can include returned capital and is not automatically profit.
Diversification
Spreading investments across different holdings to reduce concentration. It cannot eliminate investment risk or guarantee a positive return.
Total loss
The possibility of losing the entire amount invested. Early-stage business failure, insolvency and unfavorable security terms can leave investors with no recovery.
Go deeper
For complete requirements, use the SEC’s Reg CF overview, issuer guidance and small-business glossary.
Explore CfPA education and industry resources → Watch CfPA videos →
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