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Raising money from investors — even a small, informal round from friends and family — can trigger obligations under both federal securities law and the Texas Securities Act. This guide covers the basics of the Texas State Securities Board, common exemptions, and crowdfunding rules that apply to private placements.
Quick Answer
- Offering securities in Texas can trigger registration obligations under both federal law and the Texas Securities Act, unless an exemption applies.
- The Texas State Securities Board (TSSB) enforces the Act, registers securities professionals, and investigates fraud.
- Texas's intrastate exemption can allow qualifying offerings made solely within Texas to avoid Texas registration, but a separate federal exemption must also apply to avoid SEC registration.
- Even exempt offerings often require a notice filing with the TSSB, along with an associated filing fee.
- Federal Regulation Crowdfunding currently allows eligible companies to raise up to $5 million in a 12-month period from the general public.
Key Takeaways
- "Exempt from registration" does not mean exempt from all state filing obligations — many exemptions still require notice filings.
- Texas's intrastate exemption is a state-law exemption from Texas registration — a separate federal exemption must be analyzed independently to avoid SEC registration.
- The relevant notice filing for many Texas exemptions is Form 133.29, not a generically-named form.
- Federal Rule 506 offerings can raise unlimited amounts but still require a Form D notice filing with the TSSB.
- Texas also maintains its own intrastate crowdfunding exemption, separate from federal Regulation Crowdfunding.
- Federal Reg CF issuers must use an SEC-registered funding portal or broker-dealer intermediary.
- Disclosure obligations apply even to exempt and crowdfunded offerings — investors must receive material information regardless of exemption status.
- Improperly claiming an exemption can expose the issuer to rescission rights, penalties, and potential securities fraud liability.
- Securities offering rules are complex and fact-specific — this guide is not a substitute for securities counsel before raising capital.
1. Two Layers of Regulation: Federal and Texas
Offering or selling securities to Texas investors can implicate both federal securities law (enforced by the SEC) and the Texas Securities Act (enforced by the Texas State Securities Board). An offering that's exempt from federal registration is not automatically exempt from Texas requirements, and vice versa — each layer must be analyzed separately.
2. The Role of the Texas State Securities Board
The Texas State Securities Board (TSSB) enforces the Texas Securities Act, registers broker-dealers and investment advisors operating in Texas, investigates securities fraud, and reviews securities offerings and exemption claims made under Texas law.
3. What Counts as a "Security"
The definition of "security" under both federal and Texas law is broad, covering not just traditional stock but also many notes, investment contracts, and other instruments where investors provide money with an expectation of profit derived from the efforts of others. Founders often underestimate how broadly this definition applies to instruments like convertible notes or SAFEs.
4. Registration Is the Default Rule
As a general rule, securities offerings must be registered unless an applicable exemption from registration applies. This means the burden is on the company raising capital to correctly identify and satisfy the requirements of whatever exemption it intends to rely on.
5. Texas's Intrastate Offering Exemption
Texas law provides an intrastate limited offering exemption that can allow qualifying offerings made solely within Texas to avoid Texas securities registration, provided the requirements of the exemption are satisfied. A separate federal exemption must also be available if the issuer intends to avoid federal registration.
The Intrastate Limited Offering Exemption exempts sales by issuers, or by a registered dealer acting on the issuer's behalf, made without public solicitation or advertisement, if all offers and sales are made in an offering solely within Texas in any 12-month period.7 Tex. Admin. Code § 109.13(l)
6. Intrastate Exemption Requirements
Relying on the Texas intrastate exemption requires the offering to satisfy the Texas requirements, including the Texas-only offering requirements and applicable purchaser qualifications. A separate federal intrastate exemption must be analyzed independently, and sales must be made without general public solicitation or advertising.
| Requirement | Detail |
|---|---|
| Non-accredited purchaser limit | Up to 35 new qualifying non-accredited security holders, plus an unlimited number of qualifying accredited investors |
| Geographic scope | All offers and sales must occur solely within Texas in the applicable 12-month period |
| Solicitation | No public solicitation or advertising of the offering |
| Disqualification | Unavailable if the issuer or its dealer was subject to certain prior regulatory or legal action |
7. Notice Filing Requirements
Relying on an exemption from registration doesn't necessarily mean no state filing is required. Depending on the purchasers and how the offering is conducted, the Texas intrastate exemption may require a notice filing with the TSSB. For example, Form 133.29 is required for certain sales to natural persons when the securities are not sold through a Texas-registered dealer.
An issuer who is not a registered securities dealer and who does not sell securities by or through a registered securities dealer shall file a notice on Form 133.29 not less than 10 business days before any sale claimed to be exempt... may be consummated. Every issuer filing a notice on Form 133.29 shall pay a filing fee of 1/10 of 1.0% of the aggregate amount of securities described as being offered for sale, but in no case more than $500.7 Tex. Admin. Code § 109.13(l)(7)
8. Rule 506 Offerings and Form D
Issuers relying on the federal Rule 506 exemption (under Regulation D) can raise an unlimited amount of money and generally preempt state-level securities registration. However, a notice filing — Form D — must still be made with the TSSB no later than 15 days after the first sale in Texas, along with a filing fee of 1/10 of 1% of the aggregate offering amount, capped at $500.
9. Disclosure Obligations for Exempt Offerings
Regardless of which exemption applies, issuers generally must provide investors with material information necessary to make an informed investment decision. Exemption from registration is not exemption from anti-fraud provisions — misleading or incomplete disclosures can still expose an issuer to liability even in a properly exempt offering.
10. Federal Regulation Crowdfunding
Federal Regulation Crowdfunding (Reg CF) allows eligible companies to raise capital from the general public — including non-accredited investors — through SEC-registered funding portals or broker-dealers. As of this writing, the current offering cap remains $5 million within a rolling 12-month period, a limit that has not changed since the SEC's 2020 rule amendments took effect in 2021.
11. Texas Intrastate Crowdfunding Exemption
Separate from the federal Reg CF framework, Texas maintains its own intrastate crowdfunding exemption, with its own notice filing (Form 133.21, Crowdfunding Exemption Notice) and eligibility requirements limited to Texas-based issuers and Texas resident investors.
12. Platform Requirements and Investor Limits
Crowdfunding offerings — whether federal or Texas intrastate — typically involve platform-level requirements (such as using a registered intermediary) and investor-level limitations tied to income and net worth, designed to limit how much any individual non-accredited investor can commit to speculative early-stage offerings.
13. Consequences of Getting It Wrong
Risk
Improperly claiming an exemption — for example, selling to an out-of-state investor under the intrastate exemption, or missing a required notice filing — can expose the issuer to investor rescission rights, TSSB enforcement action, and potential securities fraud liability, even where the underlying business itself was legitimate.
14. Common Mistakes
Mistake
Assuming "friends and family" rounds are automatically exempt
Even small, informal raises from friends and family involve securities law analysis — there's no blanket "friends and family" exemption under Texas or federal law.
Mistake
Missing the required Texas notice filing
Assuming an exemption from registration means no state filing is required at all — many exemptions still require a timely notice filing, such as Form 133.29 or Form D.
Mistake
Accepting a single out-of-state investor under the intrastate exemption
This can disqualify the entire offering from the exemption, since the "solely within Texas" requirement is applied strictly.
Mistake
Publicly advertising an offering meant to rely on a non-solicitation exemption
Social media posts, pitch competitions, or public fundraising pages can constitute prohibited general solicitation under certain exemptions.
Mistake
Treating a SAFE or convertible note as exempt from securities analysis
These instruments are generally themselves securities and require the same exemption analysis as traditional equity offerings.
Mistake
Not updating disclosures as the business changes
Providing investors with outdated or incomplete information during an ongoing offering can create disclosure liability even if the original materials were accurate.
15. Compliance Checklist
- Instrument being offered confirmed to constitute a "security" under applicable law
- Applicable federal exemption identified and requirements confirmed
- Applicable Texas exemption identified and requirements confirmed separately from the federal analysis
- All purchaser eligibility and residency requirements verified for any exemption relied upon
- No prohibited general solicitation or advertising used in connection with the offering
- Required Texas notice filing, if applicable, submitted on time
- Applicable filing fee calculated and paid
- Investor disclosures reviewed for completeness and accuracy before the offering closes
- Securities counsel consulted before finalizing exemption strategy
Primary Government Sources
Texas State Securities Board — Exemptions from Registration
16. Frequently Asked Questions
Do I need to register my securities offering with Texas even if I'm exempt federally?
Not necessarily registered, but many federal exemptions still require a separate Texas notice filing. Federal exemption and Texas exemption are analyzed separately.
What is the Texas intrastate offering exemption?
It's a Texas-law exemption that can allow an issuer to sell securities to Texas residents without Texas registration, provided the offering is made solely within Texas without general solicitation, among other conditions. A separate federal exemption must also apply for the offering to avoid SEC registration.
What form do I file for the Texas intrastate exemption?
It depends on the purchasers and how the offering is conducted. Form 133.29 (Intrastate Exemption Notice) is required for certain sales to natural persons when the securities are not sold through a Texas-registered dealer, filed with the Texas State Securities Board at least 10 business days before the first exempt sale claimed under that requirement.
How much can I raise under federal Regulation Crowdfunding?
As of this writing, eligible issuers can raise up to $5 million in a rolling 12-month period, a cap that has remained unchanged since 2021. Confirm the current limit directly with SEC guidance, as this figure has been the subject of rulemaking petitions.
Does Texas have its own crowdfunding exemption separate from federal Reg CF?
Yes. Texas maintains an intrastate crowdfunding exemption with its own notice filing (Form 133.21) and eligibility requirements limited to Texas issuers and Texas resident investors.
Can I raise money from friends and family without worrying about securities law?
No. There's no blanket exemption for friends-and-family rounds — the same securities law analysis applies regardless of the investors' relationship to the founders.
Is a SAFE or convertible note considered a security?
Generally, yes. These instruments are typically treated as securities and require the same exemption analysis as traditional equity offerings.
What happens if I accidentally sell to an out-of-state investor under the intrastate exemption?
This can disqualify the entire offering from the exemption, potentially exposing the issuer to rescission rights and regulatory enforcement, since the exemption requires all sales to occur solely within Texas.
What is Form D and when is it required?
Form D is the notice filing required with the TSSB for offerings relying on the federal Rule 506 exemption, generally due no later than 15 days after the first sale in Texas.
Do I need a securities attorney to raise a private placement in Texas?
Securities law involves fact-specific analysis and significant liability risk for mistakes. Consulting a securities attorney before structuring and launching an offering is strongly recommended.