Rule 506(b) of Regulation D is the federal securities exemption that startups most often use. A startup relying on Rule 506(b) can raise an unlimited amount of money and sell securities to an unlimited number of accredited investors and up to 35 non-accredited investors. In practice, most startups only sell securities to accredited investors, as including any non-accredited investors in the round triggers substantial disclosure obligations under Rule 506(b). Startups must file Form D with the SEC within 15 days after the first sale of securities in the offering and make applicable state securities notice filings.
