---
title: "What Is 506(c)?"
term: "506(c)"
description: "Rule 506(c) is a U.S. private offering exemption that allows general solicitation and advertising, but every purchaser must be verified as an accredited investor."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["regulation"]
source: https://venturecapitaltracker.com/glossary/rule-506c
---

# What Is 506(c)?

> Rule 506(c) is a U.S. private offering exemption that allows general solicitation and advertising, but every purchaser must be verified as an accredited investor.

**Rule 506(c)** lets issuers publicly advertise private securities offerings, provided they verify that all investors are accredited—not just take their word for it.

## How it works

A GP launches a fund website, posts on LinkedIn, or speaks at a public webinar inviting investment. That is general solicitation, which 506(b) forbids but 506(c) permits. Before accepting capital, the issuer must verify accreditation through methods the SEC considers reasonable: reviewing tax returns, CPA letters, brokerage statements, or using a verification service.

There is no cap on the number of accredited investors or raise size under 506(c), same as 506(b). Form D still gets filed. Many AngelList-style vehicles and emerging-manager newsletters rely on this path because distribution is part of the strategy.

## Why it matters

- **GPs:** 506(c) unlocks marketing for first-time fund managers without a Rolodex of pension funds. Documentation and verification workflows become part of ops from day one.
- **Investors:** You will share financial proof or use a verifier. That friction protects both sides if the SEC asks questions later.
- **Founders:** Less common at company level, but some later-stage rounds use 506(c) when strategic outreach is broad.

## Common mistake

Running a public "invest in our fund" campaign while only collecting checkbox self-certification. That fails 506(c)'s verification standard and can force rescission offers or regulatory scrutiny.

## Related ideas

Compare with [506(b)](/glossary/rule-506b), [accredited investor](/glossary/accredited-investor) tests, Form D, and syndicate platform compliance.

## FAQ

### What is Rule 506(c) in simple terms?

It lets you advertise a private investment offering to the public, unlike 506(b). The catch: you must take reasonable steps to verify that every investor is accredited—self-certification alone is not enough.

### Why does 506(c) matter?

Emerging managers, syndicate leads, and rolling funds use 506(c) to reach new LPs online. Investors should expect tax documents, accreditation letters, or third-party verification before wiring capital.


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Source: https://venturecapitaltracker.com/glossary/rule-506c