Does Fundable have a “pre-existing relationship” with the investors on its site?

Fundable does not necessarily have a “pre-existing relationship” with investors who sign up on the site. Under Regulation D 506(c), general solicitation is allowed, but all purchasers must be accredited investors. The focus is on verifying their accredited status, not establishing a pre-existing relationship.

SEC Standards Overview (Regulation D 506(c))

• General Solicitation: Permitted, but only accredited investors can participate.

• Accreditation Verification: Issuers must take reasonable steps to verify investors’ accredited status through:

  • Documentation (e.g., W-2s, tax returns, bank statements).

  • Written confirmation from a registered broker-dealer, investment adviser, attorney, or certified public accountant.

  • Clear record-keeping of the verification process.