While venture capital is booming largely due to the hot artificial intelligence (AI) sector, Reg C.F. (Crowdfunding Regulation) is in trouble, according to a report by. Crowdfund Capital Advisors (CCA).
According to the numbers, Reg CF cratered in the first three months of 2026. Total capital commitments decreased 28% year-over-year to $87.8 million, down from $122 million in the first quarter of 2025.
The number of new issuers applying for raises under the exemption fell 32% to 187; This was the lowest number of quarterly applications in recent years.
CCA noted that although the figures were bleak, there was a trend towards fewer issuers seeking larger funding amounts, perhaps a sign that the market was maturing.
Sherwood NeissCCA Group Manager said that the figures “wake up call” and a sign that issuers don’t believe the capital is there.
“We’re watching the pipeline dry up in real time. Each of these missing applications represents a startup not launched, a product not built, and jobs not created. If policymakers don’t act, this isn’t just regulation at risk; it’s American entrepreneurship, innovation, economic stimulus, and job creation.”
Other modest signs include a year-over-year decline in the average check size from $2,400 to $2,000 and a decline in the number of investor checks written, from 56,800 to 44,000.
While 485 offers were closed in the first quarter of 2025, only 258 offers were closed in the first quarter of 2026; This number is almost half.
CCA notes: “The 32% decline in new filings is particularly significant, indicating that issuers are withdrawing from the market altogether.”
The top platforms by number of offers were:
- Honeycomb Credit
- financier
- deal maker
- Start Engine
- Air Condition the World
With the exception of Climatize Earth, the others saw significant year-over-year declines in the number of offerings.
The average raise increased 66%, from $491,000 to $815,000.
Common stock offerings saw the steepest decline, at 45%.
California continued to be the state with the most activity under the exemption.
Another reason for the decline in Reg CF was the availability of alternative exemptions for issuers who could choose between Reg CF, Reg A and Reg D. Although Reg CF only requires reporting, the funding ceiling is quite low at $5 million. This nominal amount may be a hurdle for some issuers.
A Reg A issuer can raise up to $75 million, but that exemption was recently denied. Reg A requires SEC qualification; This can take some time and cost tens of thousands of dollars.
Reg D is the simplest exemption where the issuer can raise an unlimited amount of funds by submitting a two-page document. The caveat is that only accredited investors may participate in the offering. StartEngine focused specifically on the Reg D market, more specifically secondary products, as a way to generate more revenue.
The other side of the equation is also important because investors faced a highly volatile market due to geopolitical strife. At the same time, the artificial intelligence industry has grown significantly in both the private and public sectors. Other opportunities include commodities such as gold, crypto and emerging prediction markets, which are attracting a lot of attention from investors/speculators.
