Can Followers Invest Under 506(b)? Creator Guide

Usually not. A social media following is not, by itself, a pre-existing substantive relationship, and Rule 506(b) lets you offer a deal only to people you already know well enough to evaluate their finances and sophistication, based on a relationship that began before the offering did.

If you are the sponsor, we built DoorRaise for both 506(b) and 506(c), so you can match the exemption to how you actually know your investors.

What does Rule 506(b) mean for a creator's audience?

It means the people you can solicit are limited to those you have a relationship with, not everyone who can see your content. Rule 502(c) says the issuer and anyone acting for it may not offer or sell securities by any form of general solicitation or general advertising, and Rule 506(b) incorporates that condition.

The SEC's own general solicitation page lists unrestricted public websites, broadcasts and certain seminars among the forms of it. For a creator, a public video, a post or a mass email about a live deal fits that picture.

Staff describe the practical test as reaching people through impersonal, non-selective communications, especially people with no prior connection. This post is part of our wider real estate syndication coverage, and the fix for most creators is either a documented relationship process or a switch to 506(c).

What do "pre-existing" and "substantive" mean?

A pre-existing relationship started before the offering, and a substantive one gives you enough information to evaluate the person's financial circumstances and sophistication. Neither word is defined in the text of Rule 502(c). The concept comes from SEC staff guidance.

In the Citizen VC no-action letter of August 6, 2015, the staff said the quality of the relationship is the most important factor. They also said there is no specific duration of time or particular short-form accreditation questionnaire that can be relied upon solely.

On the SEC's general solicitation page, a relationship is substantive when the offering party "has sufficient information to evaluate, and does evaluate" a potential investor's status. The relationship must also be formed before the offering starts, or be established through an investment professional before the person joins the offering.

Two details from the Citizen VC facts matter for creators. The firm qualified people to join its platform without showing them any investment, and the opportunities appeared only after someone was a member. The staff relied on those facts, and said different facts might lead to a different conclusion.

Which followers count and which do not?

Whether a person counts depends on what you actually know about them and when you learned it. Here is how we would sort common situations, as examples rather than a legal list.

Situation	Likely counts?
Someone has watched your videos for a year	Probably not, if you know nothing about their finances
A new follower who signed up for a webinar about the live deal	No, the offering has already started
Someone who replied to your newsletter and had a call with you about goals, experience and income, with notes kept, before any deal	Possibly, depending on the facts
A past co-investor you screened in an earlier deal	Can count, if you know their finances and sophistication
A friend or colleague who knows you well and whose circumstances you know	Likely

There is no number of likes, replies or email opens that converts a viewer into a relationship. The question is what you knew and when.

What does SEC staff say about online relationships?

SEC staff say it is likely harder to establish a pre-existing substantive relationship when the offering is conducted over the internet. That appears in Securities Act Rules C&DI 148.01, dated January 23, 2026, which you can find on the SEC's C&DI page.

The same question says an issuer cannot establish such a relationship solely through the passage of a specific duration of time. That cuts against a common creator idea: "they have followed me for two years, so they are a relationship."

We could not open every numbered C&DI on Regulation D, so we do not cite others here. Ask your attorney which staff interpretations apply to your facts.

Who can invest under 506(b)?

Unlimited accredited investors, plus up to 35 non-accredited purchasers in any 90 calendar days who are sophisticated, alone or with a purchaser representative. See the SEC's Rule 506(b) overview and 17 CFR 230.506(b).

If any purchaser is non-accredited, Rule 502(b) requires additional disclosure, including financial statement information, furnished a reasonable time before sale. That adds legal and accounting cost, which is why many sponsors stay accredited-only. The non-accredited route is covered in non-accredited followers and real estate options.

How does a creator build substantive relationships?

You build them by learning a person's finances and experience in a real conversation, and recording it, before your offering starts. A process looks like this.

Qualify people before there is a deal. Invite followers who want to invest to a short call about goals, experience and accreditation status.
Keep notes. Record what you learned, what documents or answers you saw, and the date.
Do not mention a live deal until the person is qualified and your offering is ready.
Separate education from the pitch. Teaching how syndications work is different from pitching a specific property to the public.
Keep it individual. Pushing thousands of followers through a form is not the same as knowing them, and the more mass the process, the weaker the argument.
Have counsel review the process before you scale it.

For how to find investors in general, see how to find investors for real estate.

A worked example (illustrative)

These numbers are illustrative, not from a real raise. A creator has 12,000 followers and 300 email subscribers. Over six months, before any deal exists, she holds 60 individual calls with subscribers and keeps notes on each person's income, assets and investing history.

After the calls, 40 people look like accredited investors on the information she gathered. When she later opens a 506(b) offering, she contacts only those 40. If 15 of them invest at $40,000 each, that is 15 x $40,000 = $600,000.

Under 506(c), she could post to all 12,000 followers, but each investor would have to be verified. The 506(b) route gives her a smaller, documented list and no verification step beyond her own reasonable belief. The 506(c) route gives her reach and a mandatory gate.

Neither is better in the abstract. The creator with 60 documented calls fits 506(b). The creator with a large audience and no calls fits 506(c).

Can you switch from 506(c) to 506(b)?

Only for people you had a substantive relationship with before the 506(b) offering began. Under Rule 152(a)(1), for an offering that prohibits general solicitation, the issuer must reasonably believe, for each purchaser, that it either did not solicit that purchaser through general solicitation or established a substantive relationship before the offering started.

C&DI 148.01 applies this to a 506(c) offering followed by a 506(b) offering: the issuer can sell to people it solicited through the 506(c) general solicitation only if it established a substantive relationship with them. Waiting does not do it. Staff say time alone does not create the relationship.

Our take

Our take: most creators with an audience in the thousands should pick Rule 506(c), not stretch the relationship test. A 506(c) raise has a clear gate, verification, and it lets you talk about the deal openly.

We think Rule 506(b) is a good fit for a creator who has run calls, kept notes and truly knows the people they are inviting. It is also a good fit for a sponsor who raises mostly from friends, family and past investors.

We do not think a webinar sign-up page or a "get on the list" form turns strangers into relationships. If the only thing you know about a person is their email address, you do not know their finances.

Trade-offs and who this is not for

Rule 506(b) saves the verification step but limits your marketing and puts the burden on your records. It is hard to prove a relationship you did not document.

Not for creators who want to pitch a live deal in videos or posts. That is general solicitation. See what is general solicitation.
Not for creators who cannot keep records. Without dated notes, the argument weakens.
Not for creators who plan to add non-accredited investors casually. They bring disclosure requirements and a sophistication test.

Common mistakes:

Treating a webinar attendee list as a relationship list.
Pitching the deal during the qualification call, which blurs the line between building a relationship and making an offer.
Letting a partner or assistant post the deal publicly while you run a 506(b) offering.

How DoorRaise fits in

DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from people who already trust them (friends, followers), under Rule 506(b) or 506(c). It is software, legal document preparation, escrow coordination and verification services, not a law firm, broker-dealer, investment adviser, funding portal, bank or escrow agent.

We do not decide whether your relationships are substantive. That judgment stays with you and your attorney.

We charge three flat fees and take 0% of the raise or profits.

The $500 setup fee, due when you submit the deal, covers forming the deal's LLC, investor documents from attorney-approved templates, an escrow account in the deal's name, the deal page, live call sign-up, and accreditation checks on every investor.

The $5,000 closing fee, paid from the funds raised and only if the deal closes, covers attorney review of the offering documents, sponsor, purchase contract, title and loan checks, and the Form D filing.

The $3,500 yearly fee covers bookkeeping, the tax return and K-1s while you own the property.

State filing fees are included in the $5,000 closing fee. See flat-fee pricing.

Ready to raise? Create your free sponsor page or see pricing.

FAQ

Do my followers count as a pre-existing substantive relationship?

Not by themselves. You need enough information to evaluate each person's financial circumstances and sophistication, gained before the offering started.

Not if the list is a general audience you do not know. That would likely be general solicitation. You can contact people you have qualified and can document.

How many non-accredited investors can I take under 506(b)?

Up to 35 in any 90 calendar days, and each must have enough knowledge and experience to evaluate the investment, alone or with a purchaser representative. You also owe them the added Rule 502(b) disclosure.

Is a questionnaire enough to qualify someone?

Staff said no particular short-form accreditation questionnaire can be relied upon solely. A questionnaire can be part of the picture, but the relationship itself matters most.

Can I qualify followers by having them watch a video first?

We would not rely on that. A mass video is impersonal, and if it describes a live deal it is the kind of communication 506(b) restricts. Ask your attorney before building any funnel.

Is Rule 506(c) easier for creators?

It is usually clearer, because public promotion is allowed, but every investor must be accredited and verified. See Rule 506(c) for content creators.

Sources

This article is general information, not legal, tax or investment advice. Talk to a securities attorney before you choose an exemption. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.