Overview

Regulation Crowdfunding (Reg CF) has transformed startup fundraising by allowing companies to raise up to $5 million from both accredited and non-accredited investors through SEC-registered intermediaries. Unlike traditional private placements that are limited to wealthy or sophisticated investors, Reg CF opens the door to community-based fundraising, customer-investors, and broad-based capital formation — all within a regulatory framework designed to protect retail investors.

This template provides the subscription agreement that governs the legal relationship between the issuer and each investor in a Reg CF offering. It is designed to work alongside the company’s Form C filing and the intermediary platform’s own documentation, addressing the unique regulatory requirements of crowdfunding including investment limits, cancellation rights, escrow mechanics, and one-year transfer restrictions.

What This Template Covers

Investment Commitment and Escrow. Documents the investor’s subscription for a specified number of securities at the offering price, with funds held in escrow by the intermediary until the target amount is achieved. Addresses oversubscription allocation, rolling versus single close mechanics, and the conditions that must be satisfied before funds are released to the issuer.

Investor Limits and Self-Certification. Implements the SEC’s tiered investment limit system based on the investor’s annual income and net worth, with a self-certification framework and calculation worksheet. Includes aggregate investment tracking across all Reg CF offerings — a requirement that many subscription agreements handle inadequately, leaving issuers exposed to limit violations.

Cancellation and Withdrawal Rights. Covers the investor’s right to cancel within 48 hours of commitment, the right to cancel before the target deadline, the issuer’s obligation to reconfirm commitments after material changes, and refund mechanics through the intermediary — rights that are mandated by regulation and cannot be waived.

Transfer Restrictions. Documents the one-year holding period under Section 4(a)(7) with limited exceptions for transfers back to the issuer, to accredited investors, to family members, and upon death or divorce. Includes legend requirements and issuer transfer agent procedures — ensuring investors understand the illiquidity of their investment from the outset.

Risk Factors and Disclosures. Provides comprehensive risk factor disclosures covering early-stage company risks, illiquidity, dilution, limited voting rights, platform risk, valuation uncertainty, and the possibility of losing the entire investment. Supplements the risk factors in the Form C filing with subscription-specific considerations.

Ongoing Disclosure. Addresses the issuer’s annual reporting obligations under Form C-AR, the conditions under which reporting may be terminated, and investor access to ongoing company information through the intermediary platform — setting appropriate expectations for post-investment communications.

Why Entrepreneurs Need This

Regulation Crowdfunding has become a legitimate fundraising channel for startups, particularly those with strong consumer brands, community followings, or missions that resonate with retail investors. But the regulatory framework is detailed and investor-protective — issuers who use inadequate subscription documentation risk SEC enforcement, investor rescission claims, and intermediary platform issues. A proper subscription agreement protects the company by documenting compliance with investment limits, delivering required disclosures, and establishing clear transfer restrictions from the start.

Key Provisions

Investment Limit Calculator. Includes a step-by-step worksheet that walks investors through the annual income and net worth test, with clear instructions for calculating their individual investment limit and certifying aggregate compliance across all Reg CF offerings in the prior 12-month period.

Class Action Rights Preserved. Unlike many private placement subscription agreements, this template preserves investor class action rights — reflecting both SEC guidance and the reality that waiving such rights for retail investors would likely be unenforceable and invite regulatory scrutiny.

Intermediary Coordination. Addresses the three-party structure unique to Reg CF — issuer, investor, and intermediary — with clear allocation of responsibilities for escrow, communications, cancellation processing, and ongoing disclosure delivery through the platform.

When to Use This Template

Use this subscription agreement for any securities offering conducted under Regulation Crowdfunding through an SEC-registered funding portal or broker-dealer. The template should be customized for each offering to reflect the specific securities being offered (equity, debt, SAFEs, revenue-share notes), the offering terms, the intermediary platform’s requirements, and the company’s Form C disclosures. Securities counsel should review the subscription agreement in conjunction with the Form C and the intermediary’s documentation before launching the offering.

Part of the Montague Law Entrepreneur Forms Library — the largest free startup legal template library available.