The SEC has recently updated the rules governing Rule 506(c) offerings, and for many searchers and independent sponsors, this could be a game-changer in raising capital. While many in the private investment space have traditionally relied on Rule 506(b) for its flexibility in investor verification, the new regulatory environment may make 506(c) the more effective option—especially for those looking to expand their investor base through public marketing.

Why 506(c) May Now Be the Better Option: ✅ You Can Advertise Your Deal – Unlike 506(b), where solicitation is restricted, 506(c) allows you to publicly promote your investment opportunity through online platforms, social media, pitch events, and newsletters. This can significantly increase exposure to potential investors beyond just personal networks.

✅ More Scalable Fundraising – Many searchers and independent sponsors rely on word-of-mouth to secure investors under 506(b), but 506(c) lets you reach a broader pool of accredited investors who may not be in your immediate network.

✅ More Transparency & Efficiency – Because all 506(c) investors must be verified accredited investors, you avoid the gray areas of self-certification under 506(b), reducing regulatory risk and ensuring a more sophisticated LP base.

✅ Institutional Appeal – Some family offices and institutional investors actually prefer 506(c) offerings because the accredited investor verification ensures compliance and credibility.

What’s Changing? The SEC’s new rule is clarifying accredited investor verification requirements for 506(c), but for sponsors willing to comply, the ability to legally market an offering to a much wider investor base may far outweigh the challenges.

Key Takeaway If you’ve been hesitant about using 506(c) because of verification concerns, the ability to publicly market your deal could now make it a superior fundraising tool over 506(b)—especially as independent sponsors and searchers look to scale their capital raises.