Regulation A vs Regulation D
The two exemptions almost every private data center offering uses, compared on who can invest, how much can be raised, what disclosure you get, and what ongoing reporting means for you as an investor.
Nearly every private AI data center offering you will see is sold under one of two SEC exemptions: Regulation A or Regulation D. Which one it is determines whether you can invest at all, how much you may put in, what disclosure you receive, and — the part most people miss — whether you ever find out what happened to your money.
Side by side
| Regulation A | Regulation D (Rule 506) | |
|---|---|---|
| Who can invest | Anyone, including non-accredited investors | 506(b): unlimited accredited, no more than 35 non-accredited in any 90-day period. 506(c): accredited only, verified |
| Raise limit | Tier 1: $20M per 12 months. Tier 2: $75M | No limit |
| Investment cap on you | Tier 2: non-accredited limited to the greater of 10% of annual income or net worth | None |
| SEC filing | Offering statement on Form 1-A, filed on EDGAR | Form D notice only |
| SEC review | Must be qualified by the Commission before sales | None |
| Audited financials | Required for Tier 2 | Not required by the exemption |
| Ongoing reports | Tier 2: Forms 1-K, 1-SA, 1-U | None |
| General advertising | Permitted | 506(b): no. 506(c): yes |
Sources: SEC, Regulation A; SEC, Regulation A: Guidance for Issuers; SEC, Private placements — Rule 506(b).
Regulation A: public-ish, with real paperwork
Reg A is sometimes called a "mini-IPO", which oversells it, but the comparison is not meaningless. The issuer files an offering statement on Form 1-A on EDGAR; Part II is the offering circular, the primary disclosure document. Securities cannot be sold until the offering statement is qualified by the Commission.
Tier 1 allows up to $20 million in a 12-month period. Tier 2 allows up to $75 million, and brings two things that matter to you: audited financial statements, and ongoing reports.
The investor cap. In a Tier 2 offering, a non-accredited natural person may invest no more than the greater of 10% of annual income or 10% of net worth. For entities the test is revenue or net assets. The cap does not apply to securities that will be listed on a national exchange on qualification, and it does not apply to accredited investors.
The ongoing reports are the real prize, and almost nobody reads them:
- Form 1-K, annual, within 120 calendar days of fiscal year end.
- Form 1-SA, semiannual, within 90 calendar days after the first six months.
- Form 1-U, current, within four business days of certain events.
In a development project these filings are how you learn, independently of the sponsor's newsletter, whether the lease was signed and the building powered. Before investing in any Reg A issuer, look up its filing history on EDGAR. An issuer that has filed before has a record you can check against what it told investors at the time. One that has not is asking you to take the projections on trust.
Regulation D: the default for serious private capital
Rule 506 has no raise limit and requires only a Form D notice — a short filing that names the issuer and the offering, with no financial detail. There is no SEC review, no mandated audited financials and no ongoing reporting.
506(b) permits unlimited accredited investors and no more than 35 non-accredited investors in any 90-calendar-day period, but no general advertising. In practice sponsors take accredited investors only, because admitting non-accredited ones triggers additional disclosure obligations.
506(c) permits public advertising but requires the issuer to take reasonable steps to verify accredited status — documents, not a tick box. If you have seen a data center deal advertised openly and then been asked for tax returns, you are looking at 506(c).
What you receive instead of mandated disclosure is a private placement memorandum, prepared by the sponsor, with no regulator having reviewed it and no audit requirement behind it. It may be excellent. It is not independently checked.
What the difference means in practice
Reg A is more transparent and often worse priced. The disclosure and reporting burden is real, and so is the cost of meeting it. Issuers who choose Reg A usually do so because they want to reach retail investors — which means the offering is being marketed to people who will not negotiate terms.
Reg D is less transparent and usually better priced. Institutions and family offices invest here, and they negotiate: preferred returns, information rights, consent provisions. You, investing the minimum, get the terms they negotiated or the terms the sponsor set, with no reporting obligation behind them.
So the structure is not a quality signal in either direction. What it tells you is what information you will have and who else is at the table.
"SEC qualified" is not SEC approval
Worth stating plainly because the misuse is routine. Qualification means a disclosure document cleared review. It is not an opinion that the projections are reasonable, the price is fair or the deal is sound. Marketing that puts "SEC qualified" next to a yield figure, implying official blessing of that yield, is misleading you — and that, in itself, is information about the sponsor.
Checking which one you are looking at
- Search EDGAR for the issuer. A Form 1-A means Reg A; a Form D means Reg D.
- For Reg A, read the offering circular — especially risk factors and use of proceeds — then the most recent 1-K and 1-SA.
- For Reg D, read the private placement memorandum and the operating agreement, with attention to the distribution waterfall and fees.
- Either way, work through the offering checklist.
Related: accredited investor requirements, and what you can buy with a few thousand dollars.