Every Regulation Crowdfunding (Reg-CF) offering must run through a single online intermediary that is registered with the SEC either as a funding portal or as a broker-dealer — you cannot sell a Reg-CF security directly to the public without one. The practical difference is scope: a funding portal is a stripped-down intermediary that hosts the offering but is legally barred from giving advice, soliciting investors, or touching investor money, while a registered broker-dealer can do all three, which changes what services you get, what it costs, and how the campaign is run.
This requirement trips up first-time issuers who assume they can raise on their own website or through an unregistered marketing agency. They cannot. Below is what the intermediary rule actually says, a side-by-side of funding portals versus broker-dealers, the fee differences, and a decision framework for choosing between them — with primary-source citations you can verify.
The Reg-CF intermediary requirement, in plain terms
Section 4(a)(6) of the Securities Act exempts crowdfunding offerings from registration, but only if the offering is conducted through an intermediary that meets specific conditions. Under 17 CFR 227.300 (Intermediaries), that intermediary must "Be registered with the Commission as a broker under section 15(b) of the Exchange Act … or as a funding portal in accordance with the requirements of § 227.400." There is no third option and no self-hosted exception.
The same rule defines a funding portal as a broker acting as a Reg-CF intermediary that does not offer investment advice or recommendations, solicit transactions, compensate anyone for solicitation, or hold investor funds or securities. A broker-dealer registered under Section 15(b) of the Exchange Act carries no such limits. That single definitional gap is the entire distinction between the two paths, and it cascades into everything else.
An issuer runs one Reg-CF offering on one intermediary's platform at a time. The intermediary — not the issuer — is responsible for account opening, investor education, the investor questionnaire, aggregating investment limits across the platform, conducting bad-actor and background checks, and providing the communication channels where investors and the issuer interact. For how this fits into the broader campaign schedule, see our Reg-CF campaign timeline from Form C to launch.
Funding portal vs. broker-dealer: side-by-side
Both types of intermediary can host a Reg-CF raise. The comparison below covers the factual, publicly verifiable differences — not a ranking — so you can match the intermediary to the offering.
| Attribute | Funding Portal | Registered Broker-Dealer |
|---|---|---|
| SEC registration basis | Funding portal registration under § 227.400 (Form Funding Portal); FINRA membership required | Broker registration under Exchange Act § 15(b); FINRA membership required |
| Can host Reg-CF offerings | Yes | Yes |
| May give investment advice or recommendations | No — prohibited | Yes |
| May solicit investors to buy | No — prohibited | Yes |
| May hold investor funds or securities | No — must use a qualified third party / escrow agent | Yes (subject to net-capital and custody rules) |
| Other exemptions it can run (Reg-D 506(c), Reg-A+) | No — Reg-CF only | Yes — full securities offerings |
| Typical examples (platforms operate under one or both models) | Wefunder, StartEngine, Republic funding-portal entities | Dalmore, DealMaker Securities, broker-dealer arms of larger platforms |
What a funding portal cannot do — and why it matters
The prohibitions are not a matter of platform policy; they are statutory. 17 CFR 227.402 (Conditional safe harbor) restates that under Section 3(a)(80) of the Exchange Act a funding portal "may not: offer investment advice or recommendations; solicit purchases, sales, or offers to buy the securities offered or displayed on its platform … [or] hold, manage, possess, or otherwise handle investor funds or securities." The rule does carve out a safe harbor for narrow curation — a portal may apply objective, non-advisory criteria to determine which offerings appear, and may highlight offerings by neutral facts like security type or progress toward the target — but it may not highlight an offering based on "the advisability of investing." Practically, that means a funding portal hosts and administers your raise; it does not sell it for you. The investor acquisition — the traffic, the ads, the email, the conversion funnel — is on the issuer and its marketing team.
What a registered broker-dealer adds
Because a broker-dealer is not bound by the funding-portal prohibitions, it can actively participate in the offering: make recommendations (subject to Reg BI and suitability obligations), solicit and communicate with prospective investors, and, critically, run offerings under other exemptions. An issuer contemplating a raise that might combine or later convert to Reg-D 506(c) or Reg-A+ often prefers a broker-dealer relationship for continuity. The trade-off is cost and process: broker-dealers are subject to net-capital requirements, custody rules, and heavier compliance overhead, which is typically reflected in their pricing.
Cost and fee differences
Intermediary economics vary by platform and deal, and fee schedules change, so treat the following as a qualitative map rather than a quote. Confirm current numbers directly with any intermediary before signing.
- Success fee: Both models commonly charge a percentage of the total amount raised, frequently in the mid-single-digit range, typically payable only if the raise closes. Some intermediaries take a portion in the securities being offered rather than cash.
- Fixed and setup fees: Portals may charge posting, filing, or technology fees. Broker-dealers more often layer on due-diligence, onboarding, or engagement fees reflecting their expanded role.
- Escrow and payment processing: Because a funding portal cannot hold investor funds, a qualified third party (escrow agent) handles the money and charges separately. Broker-dealers may bundle or itemize this.
- Marketing: Neither the portal's nor the broker-dealer's fee covers investor acquisition. Advertising, landing pages, and campaign management are a separate budget line — the largest controllable cost in most Reg-CF raises.
For how the intermediary choice interacts with per-investor caps and the overall raise ceiling, see our breakdown of Reg-CF investment limits.
How to choose your intermediary
The decision is less about "portal vs. broker-dealer" in the abstract and more about the offering in front of you. A structured way to work through it:
- Confirm the intermediary's registration and FINRA membership. Verify the entity is currently registered — as a funding portal or broker — and is a FINRA member before you rely on it. An offering run through an unregistered intermediary is not a valid Reg-CF offering.
- Match the intermediary to your capital-raising roadmap. If Reg-CF is a one-time raise, a funding portal is usually sufficient. If you anticipate a parallel or follow-on Reg-D 506(c) or Reg-A+ round, a broker-dealer that can run all three keeps the relationship continuous.
- Model total cost, not just the headline success fee. Add setup fees, escrow, payment processing, and — most importantly — your marketing budget. The intermediary's percentage is rarely the biggest number.
- Assess the platform's audience and category fit. Some platforms attract more retail investors in specific verticals. That existing audience is real, but it does not replace your own investor-acquisition effort.
- Read the intermediary agreement for security-versus-cash fees and exclusivity. Understand whether you are giving up equity, and whether the agreement restricts running elsewhere.
- Confirm who owns the investor relationship and data. This affects how you retarget uncommitted investors and communicate through the raise.
Common mistakes issuers make with the intermediary requirement
- Assuming a marketing agency can be the intermediary. It cannot. A marketing partner drives traffic and conversions to the registered intermediary's offering page; it is not itself a broker or portal, and it may not solicit purchases as if it were.
- Confusing "listed on a portal" with "marketed by a portal." Funding portals are prohibited from soliciting. Hosting is not selling.
- Underbudgeting acquisition. Because neither intermediary type sells the offering for the issuer, campaigns that skip a real marketing plan tend to stall well short of target.
- Handling investor funds directly. Reg-CF funds flow through a qualified third party or the broker-dealer, never straight to the issuer before closing.
Growth Turbine has provided marketing support across more than $490M in aggregate issuer-reported totals and 200+ campaigns supported across 23+ crowdfunding platforms, spanning Reg-CF, Reg-D 506(c), Reg-A+, and tokenized securities offerings — so the investor-acquisition layer that sits on top of whichever intermediary you choose is where our work lives. Compare specific platforms in our multi-platform Reg-CF comparison, or review the full list on our platforms page.
Frequently Asked Questions
Do I have to use an intermediary for a Reg-CF raise?
Yes. Under 17 CFR 227.300, every Regulation Crowdfunding offering must be conducted exclusively through one intermediary that is registered with the SEC as either a funding portal or a broker-dealer, and that is a member of FINRA. There is no self-hosted or direct-sale exception for Section 4(a)(6) offerings.
What is the difference between a funding portal and a broker-dealer?
A funding portal is a limited intermediary that may host a Reg-CF offering but is prohibited from giving investment advice, soliciting investors, or holding investor funds. A registered broker-dealer can do all of those and can also run other offering types such as Reg-D 506(c) and Reg-A+. Both must be FINRA members.
Can a funding portal promote my offering to investors?
No, not in the sense of soliciting purchases. Under 17 CFR 227.402, a funding portal may not solicit purchases or recommend a security, though a safe harbor lets it display offerings using neutral, non-advisory criteria. Active investor acquisition — advertising, email, landing pages — is the issuer's responsibility.
Can the same platform be both a funding portal and a broker-dealer?
A single legal entity is registered under one status, but many well-known platforms operate related entities — a funding portal and an affiliated broker-dealer — so the same brand can offer either path depending on the offering. Always confirm which registered entity is actually intermediating your specific raise.
Who holds the money investors commit in a Reg-CF raise?
A funding portal cannot hold investor funds, so the money sits with a qualified third party such as an escrow agent until the offering closes or is cancelled. A broker-dealer may hold funds subject to custody and net-capital rules. Funds are not released to the issuer until the closing conditions are met.
Does choosing an intermediary replace the need for a marketing budget?
No. Neither a funding portal nor a broker-dealer is responsible for driving investors to your offering, and funding portals are barred from soliciting altogether. Investor acquisition is a separate function and typically the largest controllable cost in a Reg-CF campaign.
Choosing the right partner for the layer the intermediary won't cover
The intermediary hosts and administers your Reg-CF raise; it does not fill it. That gap — turning a compliant offering page into committed investors — is a marketing problem, and it is the one issuers most often underestimate. If you are planning a Regulation Crowdfunding campaign, explore our Reg-CF equity crowdfunding marketing services to see how the acquisition layer works alongside your chosen funding portal or broker-dealer. When you are ready to map a specific raise, contact us to discuss your offering and timeline.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute legal, financial, or investment advice. Always consult with qualified legal counsel and financial advisors before launching a capital raise.
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