Intrastate Crowdfunding: Rule 147 vs. Rule 147A vs. Reg-CF for a Single-State Raise

Yes — two federal rules permit a single-state raise, and the practical difference between them is whether you are allowed to advertise. Rule 147 confines both offers and sales to residents of the issuer's state or territory; Rule 147A permits general solicitation to anyone, anywhere, but restricts actual sales to in-state residents. Neither rule carries federal preemption of state securities law, so an intrastate offering must also be registered or exempt under the law of the state where it is conducted — the opposite of how a Regulation Crowdfunding offering is treated.

Founders reach for the intrastate route for two reasons: a regionally rooted business with a local investor base, and a hope that staying inside one state avoids federal paperwork. The first is sound. The second is where the analysis breaks — the federal filing burden falls away, a state-level one replaces it, and the residency-verification obligation is stricter than most issuers expect.

Rule 147 vs. Rule 147A vs. Reg-CF: side-by-side

The state-law row decides most cases. An issuer that picks an intrastate exemption to avoid federal process inherits a state process instead — and unlike the federal regime, it differs in every state.

Rule 147: the safe harbor with no advertising

17 CFR 230.147, Intrastate offers and sales is a safe harbor, not an exemption in its own right. Paragraph (a) says so explicitly: failing the rule raises no presumption that the statutory Section 3(a)(11) exemption is unavailable. Issuers use the safe harbor because the statutory exemption on its own is imprecise.

Rule 147(b) deems an offering compliant with Section 3(a)(11) where offers and sales are made only to persons resident within the same state or territory in which the issuer is resident and doing business. Note the word offers. An open landing page, a public social post or a nationally served ad is an offer to out-of-state persons — and that alone can break the safe harbor before a dollar is raised.

The issuer residency test

Under Rule 147(c)(1), an entity organized under state law is a resident of the state where it is both incorporated or organized and has its principal place of business. The rule defines principal place of business as the state in which the officers, partners or managers primarily direct, control and coordinate the issuer's activities. A Delaware C-corp operating out of Ohio therefore fails Rule 147 — a fact pattern that describes a large share of venture-track startups.

The issuer must also be doing business in-state, satisfying at least one of four tests in Rule 147(c)(2): at least 80% of consolidated gross revenues from in-state operations, property or services; at least 80% of consolidated assets in-state at the end of the most recent semi-annual fiscal period; at least 80% of net proceeds intended for and actually used in-state; or a majority of employees based in-state. The revenue test carries its own timing instruction tied to which half of the fiscal year the first offer falls in.

Rule 147A: general solicitation, in-state sales

17 CFR 230.147A, Intrastate sales exemption is the newer instrument and the one that makes a marketed intrastate campaign workable. Paragraph (b) states that an issuer may rely on the exemption to make offers and sales using any form of general solicitation and general advertising, provided the conditions in paragraphs (c), (d) and (f) are met. Sales — not offers — are what must be confined to residents under paragraph (d).

Rule 147A also drops the incorporation requirement. Under 147A(c)(1) the issuer is a resident of the state where it has its principal place of business, full stop — so the Delaware-incorporated, Ohio-operated company that fails Rule 147 can generally qualify here. The doing-business tests in 147A(c)(2) are the same four. One carve-out: 147A(a) makes the exemption unavailable to a registered or required-to-be-registered investment company.

Both rules carry the same instruction restricting state-hopping: an issuer that has conducted an intrastate offering under either rule may not conduct another intrastate offering in a different state or territory until the paragraph (e) period has run, measured from the date of the last sale in the prior offering.

Residency verification: the condition that trips campaigns

The instruction to paragraph (d) of both rules is unambiguous and routinely ignored: obtaining a written representation from purchasers of in-state residency status will not, without more, be sufficient to establish a reasonable belief that such purchasers are in-state residents. A checkbox is not a compliance program.

Individuals are residents where their principal residence is located at the time of the offer and sale. Entities are residents where their principal place of business is. An entity formed for the specific purpose of acquiring the securities is not a resident unless all of its beneficial owners are residents — which closes the out-of-state-money-through-an-in-state-LLC workaround.

Operationally, issuers typically layer corroborating evidence — a government-issued ID address, a utility or bank statement, a geolocation signal at signup — alongside the written representation, and document the basis for the reasonable belief before accepting funds. The rule sets a standard, not a checklist; discuss the sufficiency of any particular stack with counsel.

Precautions against interstate sales

Paragraph (f) of both rules imposes three mechanical requirements at sale: a prominent legend on the certificate or other document evidencing the security stating the six-month in-state resale restriction; stop transfer instructions to the transfer agent, or a notation in the issuer's records if it transfers its own securities; and a written representation from each purchaser as to residence. Paragraph (f)(3) adds a disclosure that must be given to each offeree in the manner in which the offer is communicated — so the prescribed language belongs in the ad, the email and the landing page, not only in the subscription documents. Our overview of resale restrictions on crowdfunding shares compares these lock-ups across exemptions.

State law is the real workload

Securities sold under Section 4(a)(6) are treated as covered securities under Securities Act Section 18, which is why Reg-CF issuers deal with state regulators mainly through notice filings and antifraud authority rather than merit review. Rule 147 and Rule 147A offerings carry no equivalent preemption. The offering must be registered under, or exempt from, the securities law of the state in which it is conducted.

Many states adopted intrastate crowdfunding exemptions during the 2010s, and their terms differ materially — offering caps, per-investor limits, escrow, disclosure documents and filing fees all vary, and some programs have since been amended or fallen into disuse. Treat any generic summary of "state crowdfunding" as a starting point only, and confirm the current statute with counsel in the specific state. Our breakdown of state blue sky filings and NSMIA preemption explains where the preemption line falls.

Integration with other offerings

Paragraph (g) of both rules routes integration analysis to 17 CFR 230.152, Integration. Under 152(a), offers and sales are not integrated if the issuer can establish that each offering either complies with registration or has an available exemption. The condition that matters for a Rule 147A campaign is 152(a)(1): for a concurrent exempt offering that prohibits general solicitation — Rule 506(b) being the common case — the issuer must reasonably believe, as to each purchaser, that it did not solicit them through general solicitation or that it established a substantive relationship before that offering commenced. A publicly advertised 147A raise running alongside a quiet 506(b) round is the fact pattern that fails this test.

When intrastate is the right instrument — and when it is not

The intrastate route fits a narrow profile: operations, employees and customers genuinely concentrated in one state; an investor base that is local, identifiable and reachable without national media; and a raise size where a state filing is cheaper than a federal one. Breweries, restaurant groups, community real estate projects and local infrastructure recur for a reason.

It fits poorly where the investor base is national, or where the plan is to raise again from a broader pool within months — the six-month resale restriction and the state-switching instruction both constrain sequencing. Where reach matters more than locality, Regulation Crowdfunding generally does more work per dollar of compliance spend: the $5,000,000 twelve-month cap in 17 CFR 227.100 comes with a national investor pool and Section 18 treatment.

What an intrastate campaign actually requires of marketing

Under Rule 147, paid acquisition is largely off the table — any offer reaching an out-of-state person is a problem, and no ad platform delivers perfect geographic containment. Campaigns typically run on owned channels, gated, with in-state screening before offering materials are shown.

Under Rule 147A, the media plan looks conventional, with three differences. First, the paragraph (f)(3) disclosure language has to travel with the creative, in the medium the offer is communicated. Second, the funnel needs a residency gate positioned before the subscription step, so out-of-state interest is disqualified at conversion rather than refunded later. Third, cost per qualified in-state investor becomes the only metric that matters — a national traffic mix will make blended cost-per-lead look better than the campaign actually is. Growth Turbine has provided marketing support across more than $490M in aggregate issuer-reported totals and 200+ campaigns supported across Reg-CF, Reg-D 506(c), Reg-A+, and tokenized securities offerings; in geographically constrained raises, the gate belongs upstream.

Frequently Asked Questions

Can I advertise an intrastate offering online?

Under Rule 147A, yes — the rule permits offers and sales using any form of general solicitation and general advertising, with sales restricted to in-state residents. Under Rule 147, no: both offers and sales must be confined to residents of the issuer's state, so publicly accessible advertising generally breaks the safe harbor.

Does a Delaware corporation qualify for an intrastate offering?

Not under Rule 147, which requires the issuer to be both incorporated or organized in the state and headquartered there. Rule 147A drops the incorporation requirement and looks only to the principal place of business — the state where officers, partners or managers primarily direct, control and coordinate the issuer's activities. A Delaware entity operating from a single state can therefore often use Rule 147A where Rule 147 is unavailable.

Is a signed statement of residency enough to verify an investor?

No. The instruction to paragraph (d) of both rules states that a written representation of in-state residency status will not, without more, be sufficient to establish a reasonable belief that the purchaser is an in-state resident. Issuers typically corroborate with additional evidence and document the basis for that belief before accepting funds.

How long are intrastate securities locked up?

For six months from the date of sale by the issuer, resales may be made only to persons resident within the state or territory where the issuer was resident at the time of that sale. For convertible securities, the restriction reaches both the convertible security and the underlying security, and a conversion in reliance on Section 3(a)(9) does not restart the period.

Do intrastate offerings still require a state filing?

Generally yes. Rule 147 and Rule 147A offerings are not covered securities under Securities Act Section 18, so state registration or a state-level exemption applies, and requirements differ by state. Confirm the current statute, forms and fees in the relevant state with qualified counsel before launching.

Where to go from here

If the investor base is genuinely local and the state statute is workable, an intrastate offering under Rule 147A is a legitimate instrument — provided the residency gate is engineered into the funnel and the state filing is handled before launch. If reach matters more than locality, the economics usually favor a national exemption: see how a marketed Reg-CF campaign is structured, or review investor acquisition across exemptions before committing legal budget to a structure.

To pressure-test which structure fits your business, geography and raise size, talk to the Growth Turbine team.

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.