What it is
General solicitation generally means publicly promoting a private securities offering, for example through advertising, social media posts, mass emails, public events or media interviews that discuss the terms of a raise. In the United States, the rules around it are set by securities law, and the FDA-style simplicity of a single rule does not apply here: the details matter.
Two commonly discussed exemptions show the contrast. Under Rule 506(b), a company generally may not use general solicitation, and it typically relies on existing, substantive relationships with the people it approaches. Under Rule 506(c), general solicitation is allowed, but all purchasers must be accredited investors and the company must take reasonable steps to verify that status.
Because the line between ordinary founder visibility and a public offering can be subtle, many founders are unsure what they can say and where. Talking about your product is not the same as advertising a securities offering, but the two can overlap. A securities attorney can help you understand where your own situation falls.
How it’s traditionally been approached
Traditionally, early-stage companies raised money through personal networks: friends, family, former colleagues, and introductions from advisors. This quieter approach fits the idea behind Rule 506(b), where relationships come first and public promotion is avoided.
Over time, some founders have preferred to speak openly about a raise, using websites, events and online channels to reach more people. That path is often associated with Rule 506(c), which allows public outreach but adds a verification step so that only accredited investors purchase.
Neither approach is inherently better. Each carries different tradeoffs in paperwork, timing, privacy and who can take part. Many founders decide with their counsel before any public statement is made, since the choice of exemption can be hard to change after the fact.
How the right investor may help
The right investor may help you think through how you communicate about a raise. A thoughtful soft circle investor who has seen many companies may share how founders typically handle introductions, updates and conversations, without telling you what to do or promising any outcome.
In a first conversation, it can help to ask how they usually prefer to connect, whether they have existing relationships with founders they back, and how they think about verification of accredited status. Also ask what they expect from a founder who is mindful of securities rules.
Remember that a soft circle is a non-binding indication of interest, not a commitment. A good investor conversation can help you gauge interest and shape your plans, while your securities counsel guides the legal structure. SoftCircle.ai is an independent directory and does not recommend or endorse any investment.
The bigger picture
Fundraising can be stressful, and worry about doing it correctly can add to the pressure. Knowing the basic difference between 506(b) and 506(c) may bring some calm, because it helps you ask clearer questions and avoid improvising on public channels.
Protect your energy and finances along the way. Build in time for rest, lean on trusted advisors, and keep your personal and company finances separate. If the strain feels heavy, resources like Providers.plus can point you toward wellbeing support, and the 988 Lifeline is available in the U.S. in a crisis.
Keep in mind
- Consult securities counsel before posting, advertising or speaking publicly about any raise.
- Rule 506(b) generally prohibits general solicitation; Rule 506(c) allows it but requires all purchasers to be accredited and reasonable verification steps.
- Soft circles are non-binding indications of interest, not commitments to invest.
- SoftCircle.ai is an educational directory, not a broker-dealer, funding portal or investment adviser, and nothing here is an offer or solicitation.
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Frequently asked questions
What is general solicitation for a startup?
General solicitation for a startup generally means publicly promoting a private securities offering through channels such as advertising, social media, mass emails or open events. Whether a particular statement counts depends on the facts. Securities counsel can help you evaluate your situation.
Can a startup use general solicitation?
Yes, in some cases. Rule 506(c) allows general solicitation, provided all purchasers are accredited investors and the company takes reasonable steps to verify that status. Under Rule 506(b), general solicitation is not allowed.
What is the difference between Rule 506(b) and 506(c)?
Rule 506(b) does not permit general solicitation and generally relies on pre-existing relationships. Rule 506(c) permits general solicitation but requires that every purchaser be accredited and that the company take reasonable steps to verify it. Counsel can explain which fits your plans.
Does posting about my startup on social media count as general solicitation?
It can, depending on what you say. Describing your product is different from advertising the terms of a securities offering, but the line can be unclear. Check with securities counsel before posting anything about a raise.
What is a soft circle in fundraising?
A soft circle is a non-binding indication of interest from a potential investor. It is not a commitment to invest and does not obligate either side. It may simply help a founder understand the level of interest.
Do I need a lawyer before publicly talking about my fundraise?
It is widely considered wise to consult securities counsel first. The choice of exemption and the way you communicate can affect your options later. SoftCircle.ai does not provide legal advice.
Educational resource. SoftCircle shares general information and connects people with independent investors. It is not professional advice. Talk with a qualified professional about your own situation.