Rule 506(b)
In accounting, rule 506(b) means the private placement most startup rounds use: no limit on the amount, unlimited accredited investors and no more than 35 other purchasers in 90 days (each sophisticated, and given disclosure), and no general solicitation.
Authority: 17 CFR §230.506(b) (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- Cap tableWays to raise: SAFEs, notes, priced rounds, debt and grants › Friends and family moneyThe same securities law as any round: Rule 506(b), accredited and non-accredited investors, and the paperwork that keeps the cap table clean.3 min
- Cap tableSecurities law for raising moneyRegulation D, Rule 506(b) and 506(c), accredited investors, Form D, state notice filings, Regulation Crowdfunding and Rule 701.9 min
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- Rule 506(c)
- Reg CF
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
Also in Equity & financing
Defined in Lexicon. This page is generated from that document, so the two can't disagree.