Raising Money in a Facebook Group, WhatsApp or Telegram Chat: Is It General Solicitation?
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Pitching a syndication in a Facebook group, WhatsApp, Telegram or Discord chat is general solicitation when the group is open to people you do not know. The label "private group" does not decide it. What decides it is whether you have a pre-existing, substantive relationship with each person who sees the offer. If you do, a small invitation-only chat can fit a Rule 506(b) raise. If you do not, the offer is allowed only in a Rule 506(c) raise, where every investor is accredited and verified.
What makes a group a general solicitation?
Rule 502(c) bars offering securities by general solicitation or general advertising in a 506(b) offering, and gives examples such as ads and communications published in similar media (17 CFR 230.502). A group post can be one if it reaches people you have no relationship with. The factors that raise the risk:
- Anyone can join, or joining only needs a click.
- You do not know most members, or you met them minutes before the post.
- The group is large, or it is advertised publicly.
- The post names the deal, a minimum, a return target or a way to invest.
- Members are invited to forward it.
What does the SEC staff say about online groups?
The staff has said the quality of the relationship matters more than any single feature. In its Citizen VC no-action letter of August 6, 2015, a platform qualified people to join before it showed any investment, and the staff relied on that sequence. The staff also said there is no set duration or form that can be relied on alone. A chat that you opened to everyone who followed you the day before you posted a deal does not fit those facts. See what a substantive relationship means.
Which groups are more or less risky under Rule 506(b)?
| Group | Typical risk of a deal post |
|---|---|
| Public Facebook group with thousands of members | High: general solicitation |
| "Private" Facebook group anyone can ask to join | High: you do not know the members |
| Telegram channel or WhatsApp channel that anyone can find | High: broadcast to the public |
| Discord server open to your followers | High unless each member is qualified first |
| Chat of people you know, who joined by your personal invitation | Lower, if you have a substantive relationship with each |
| One-to-one message to someone you already know | Lowest |
Each row assumes you have not generally solicited the members elsewhere. A pitch to a small chat may still be a general solicitation if the chat itself was recruited with a public ad for your deal.
What can you post in a group during a 506(b) raise?
Education. Underwriting notes, how an escrow works, how to read a rent roll, what a preferred return is. Do not name the live deal, its terms or a way to invest. If a member asks about your deal in the group, reply that you cannot discuss an offering there and that you will reach out directly to people you already know. See replying to DMs and comments during a raise.
What can you post under Rule 506(c)?
More, because general solicitation is allowed when every purchaser is accredited and you take reasonable steps to verify it (SEC, Rule 506(c)). Even so, what you say must be accurate and balanced under Rule 10b-5, and a group post should link to the full documents, not stand in for them.
Our take
A group is a good home for teaching and for the questions that build trust, and a poor place to make an offer. If you want to talk about your deal with the whole group, choose Rule 506(c) before you start. If you want to keep it private, make the real conversation small, personal and off the group.
Trade-offs and who this is not for
- Not for sponsors who add strangers to the group to fill a raise. That undoes any relationship you meant to rely on.
- Not a private channel. Screenshots end the privacy of anything posted.
- Common mistake: pinning the deal in the group, then saying you run 506(b). A pinned post keeps soliciting.
Related guides: General solicitation and Raising money on social media.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for apartment buildings with 5+ units from friends and followers who already trust them, under Rule 506(b) or 506(c). We are software, legal document preparation, escrow coordination and verification services. We are not a law firm, broker-dealer, investment adviser, funding portal, bank or escrow agent, and we do not hold investor money: investors wire their money to escrow at Enterprise Bank & Trust, in the deal's name.
Your group can link to a sponsor page for education, while the offering stays on the deal page behind the exemption you chose. Flat fees, never a percentage of the raise (see pricing). Create your free sponsor page.
FAQ
Is a private Facebook group general solicitation?
It can be. If you lack a substantive relationship with the members, a deal pitch in the group is general solicitation, whatever the privacy setting.
Can I pitch my deal in a WhatsApp group of people I know?
Possibly under Rule 506(b), if you have a pre-existing, substantive relationship with every member and have not generally solicited them. Keep it small and personal.
Can I share my deal in a Telegram channel?
A channel anyone can find is public. Offer a live deal there only in a Rule 506(c) raise.
What if a group member forwards my message?
You may lose the 506(b) footing if it reaches strangers. Do not put offering details in a place that can be forwarded.
Sources
- 17 CFR 230.502
- 17 CFR 230.506
- SEC, Rule 506(c)
- SEC staff no-action letter, Citizen VC, Aug. 6, 2015
- 17 CFR 240.10b-5
This article is general information, not legal, tax or investment advice. Talk to a securities attorney before you market an offering. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.