Definition
Reg D 506(b)
An SEC private placement exemption that allows accredited and up to 35 sophisticated non-accredited investors, with no general solicitation.
Rule 506(b) of Regulation D under the Securities Act of 1933 allows a private issuer to raise an unlimited amount from accredited investors and up to 35 non-accredited but sophisticated investors, provided the issuer does not engage in general solicitation or advertising. Most early-stage SPVs use 506(b) when raising from existing relationships. The trade-off is that 506(b) prohibits public marketing of the deal — sponsors must have a substantive prior relationship with each LP.