The JOBS Act: Rule 506 And Non-Accredited Investors

William Carleton, Contributing Editor, VCExperts

Joe Wallin has gotten a discussion going over on his blog about whether it's okay to include non-accredited investors in a Rule 506 deal.

"No, no, no," say startup lawyers like Joe and me.

"But the rules say otherwise," counter entrepreneurs and crowdfunding advocates who are reading the rule carefully.

What's missing, what's needed, is a viable investment crowdfunding exemption, one built around the Individual Crowdfunding Account, so that the investor can be in charge of her own investor protection.

In the meantime, if you want to raise money from non-accredited investors under Regulation D, I think you have to do something similar to what Bolstr is doing under Rule 504. This means an offering for no more than $1 million, and dealing with the relevant states.

William Carleton

Bill is a member of McNaul Ebel Nawrot & Helgren PLLC, a Seattle law firm. He blogs every day at