If you have been to accelerator demo days, you have probably seen a pitch that mentions a financing round in progress, or the details of a proposed round. In the last several years, some accelerators have worried that demo day presentations could be viewed as a general solicitation for purposes of Rule 502(c) of Regulation D under the Securities Act.
Background: why general solicitation matters for demo days
In simple terms, if a startup conducts a “general solicitation” of its securities, it must comply with additional requirements to qualify for an exemption from registration with the SEC for that offering. Those requirements are not always onerous, but they can add cost, time, and process risk. Historically, general solicitation was prohibited in certain offerings under Regulation D. Rule 506(c) now permits general solicitation, but only if the issuer takes reasonable steps to verify accredited investor status and limits sales to accredited investors.
What the SEC said originally about demo days (August 6, 2015 guidance) and what updated guidance it gave in 2025
On August 6, 2015, the SEC staff published interpretive guidance addressing whether accelerator demo days and venture fairs are automatically treated as general solicitations. The short answer was “no,” but the SEC emphasized that the analysis is facts and circumstances. Here is the relevant Q&A from the SEC website in its entirety:
Question: Does a demo day or venture fair necessarily constitute a general solicitation for purposes of Rule 502(c)?
Answer: No. Whether a demo day or venture fair constitutes a general solicitation for purposes of Rule 502(c) is a facts and circumstances determination. Of course, if a presentation by the issuer does not involve an offer of a security, then the requirements of the Securities Act are not implicated. Where a presentation by the issuer involves an offer of a security, the presentation at a demo day or venture fair may not constitute a general solicitation if, for example, attendance at the demo day or venture fair is limited to persons with whom the issuer or the organizer of the event has a pre-existing, substantive relationship or have been contacted through an informal, personal network as described in Question 256.27. If potential investors are invited to the presentation by the issuer or a person acting on its behalf by means of a general solicitation and the presentation involves the offer of a security, Rule 506(c) may be available if the issuer takes reasonable steps to verify that any purchaser is an accredited investor and the purchasers in the offering are limited to accredited investors. [August 6, 2015]
Update (March 12, 2025): The SEC staff later added more guidance that explicitly references Rule 148 (demo day communications) and also discusses investor introductions through informal angel networks. The excerpt below is from the SEC’s Compliance and Disclosure Interpretations.
Question 256.27 Question: Are there circumstances under which an issuer, or a person acting on the issuer’s behalf, can communicate information about an offering to persons with whom it does not have a pre-existing, substantive relationship without having that information deemed a general solicitation?
Answer: Yes. Under Rule 148, issuers may participate in “demo days” or similar events, pursuant to which such communications that meet the requirements of Rule 148 are not deemed to constitute general solicitation or general advertising. See also Question 256.33.
In addition, the staff is aware of long-standing practices where issuers and persons acting on their behalf are introduced to prospective investors who are members of an informal, personal network of individuals with experience investing in private offerings. For example, we acknowledge that groups of experienced, sophisticated investors, such as “angel investors,” share information about offerings through their network and members who have a relationship with a particular issuer may introduce that issuer to other members. Issuers that contact one or more experienced, sophisticated members of the group through this type of referral may be able to rely on those members’ network to establish a reasonable belief that other offerees in the network have the necessary financial experience and sophistication.
Whether there has been a general solicitation is a fact-specific determination. In general, the greater the number of persons without financial experience, sophistication or any prior personal or business relationship with the issuer that are contacted by an issuer or persons acting on its behalf through impersonal, non-selective means of communication, the more likely the communications are part of a general solicitation. [March 12, 2025]
Practical takeaways for startups
Many founders feel pressure to say something about fundraising during an accelerator demo day pitch. In most cases, it is unnecessary. The audience already understands that venture backed startups often raise capital, and the pitch itself will naturally attract inbound interest if the company is compelling. Mentioning valuation, target round size, or specific terms can also create avoidable questions and anchor expectations before you have a real lead investor.
In plain English, treat demo day as a relationship building event, not an offering: avoid publicly stating round terms, and keep any fundraising follow up targeted to appropriate investors.
Do focus on product, traction, market, and why you are the team to win.
Do invite relevant conversations after the pitch, for example, “We are building relationships with potential partners and investors.”
Do not include offering language or deal terms on slides (valuation, amount being raised, security type, investor eligibility).
Do not ask the crowd to invest or describe how to participate in a round.
Practical takeaways for accelerators
Based on the SEC’s answer above, it is usually in a startup’s best interest to avoid offering language at an accelerator demo days, including any explicit discussion of an active securities offering. It is also not realistic to expect an accelerator to ensure that every audience member has a pre-existing, substantive relationship with every presenting company. The SEC staff has also pointed to Rule 148 as a framework for demo day style communications that are not treated as general solicitation when its requirements are met. If a pitch is treated as a general solicitation, the company may lose the ability to rely on Rule 506(b) for that offering and may be pushed into a Rule 506(c) process with accredited investor verification and additional friction.
In plain English, treat demo day as a relationship building event, not an offering: avoid publicly stating round terms, and keep investor follow up targeted to appropriate, curated audiences.
Suggested slide language (what to say instead)
If you want to signal that you are open to investor conversations without turning the pitch into an offer, keep it high level and relationship oriented. Examples:
“If you want to learn more, we would love to connect after the program.”
“We are meeting with potential partners and investors over the next several weeks.”
“Please reach out if you are a good fit for our customer or strategic partner profile.”
“We are focused on execution and building relationships with the right long-term supporters.”
Conclusion
The SEC’s position is not that accelerator demo days are automatically general solicitations. It is that the analysis depends on the details, including who is in the room and what is actually said. As a practical matter, the easiest way to reduce risk is to keep fundraising terms out of the pitch deck and save securities discussions for one on one conversations with appropriate investors. If you are unsure where the line is for your situation, ask counsel before demo day.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer at Roberts Zimmerman PLLC with more than two decades of experience advising startups and venture capital investors. He is the author of “Acceleration” and StartupLawyer.com.
