While venture capital is booming, largely due to the hot artificial intelligence (AI) sector, Reg CF (Regulation Crowdfunding) is in the doldrums, according to a report from Crowdfund Capital Advisors (CCA).
According to their numbers, Reg CF cratered during the first three months of 2026. Total capital commitments declined by 28% year-over-year to $87.8 million, down from $122 million in Q1 2025.
New issuers filing to raise under the exemption declined by 32% to just 187, the lowest quarterly filing count in years.
CCA stated that while the numbers may be grim, there is a trend toward fewer issuers seeking larger funding amounts, which it described as perhaps a sign that the market is maturing.
Sherwood Neiss, Principal of the CCA Group, said the numbers were a “wake-up call” and a sign that issuers do not believe the capital is out there.
“We are watching the pipeline dry up in real time. Every one of those missing filings represents a startup that didn’t launch, a product that didn’t get built, and jobs that didn’t get created. If policymakers don’t act, it’s not just a regulation at risk — it’s American entrepreneurship, innovation, economic stimulus, and job creation.”
Other tepid signs include a year-over-year decline in average check size, from $2400 to $2000, and a drop in the number of investor checks written, from 56,800 to 44,000.
While 485 offerings closed in Q1 2025, just 258 offerings closed in Q1 2026 – almost half as many.
CCA states: “The 32% drop in new filings is particularly telling — it represents issuers opting out of the market entirely.”
The top platforms by number of offerings were:
- Honeycomb Credit
- Wefunder
- Dealmaker
- StartEngine
- Climatize Earth
With the exception of Climatize Earth, the others saw significant declines in the number of offerings year over year.
The average raise size increased to $815,000 from $491,000, a 66% increase.
Common stock offerings saw the steepest decline at 45%.
California remained the state with the most activity under the exemption.
Perhaps another reason for the drop in Reg CF was the availability of alternative exemptions for issuers, who may choose among Reg CF, Reg A, and Reg D. While Reg CF requires only a notice filing, its funding cap is very low at $5 million. This nominal amount can be an impediment to certain issuers.
A Reg A issuer may raise up to $75 million, but this exemption has recently declined. Reg A requires SEC qualification a process that can take a bit of time and cost tens of thousands of dollars.
Reg D is the simplest exemption, where an issuer may raise an unlimited amount of funds by filing a two-page document. The caveat is that only accredited investors may participate in the offering. StartEngine has notably focused on the Reg D market, more specifically, secondaries, as a way to generate more revenue.
The other side of the equation matters as well, as investors have been confronted with a highly volatile market due to geopolitical strife. At the same time, the AI sector has grown dramatically in both the private and public sectors. Other opportunities include commodities like gold, crypto, and emerging prediction markets, which have attracted considerable attention from investors/speculators.
