Why Side-by-Side Offerings Are Becoming More Common
One of the most common assumptions in the capital raising world is that a sponsor eventually has to choose a fundraising lane and stay in it.
If you want to raise money from existing relationships, you use Rule 506(b). If you want to generally solicit through podcasts, social media, webinars, conferences, newsletters, and other public marketing channels, you use Rule 506(c). For years, many sponsors have operated under the belief that these approaches must remain completely separate or be pursued one after the other.
As a practical matter, that belief often forces sponsors into a difficult decision. They have spent years building relationships with investors who know them personally, understand their track record, and have followed their business for years. At the same time, they want to expand beyond their immediate network and take advantage of the marketing opportunities that Rule 506(c) provides.
Many assume they have to pick one. The reality is often more nuanced than that.
Over the last several years, we have seen increasing interest in what we call side-by-side offerings. Rather than forcing every investor into the same offering structure, sponsors are beginning to explore situations where separate offerings may operate simultaneously while supporting the same overall investment objective or acquiring the same asset.
That concept surprises many people because it sounds like something that should not be possible. This was in fact not permitted under rules prior to 2021. Many people, including some securities attorneys, continue operating under assumptions that were formed before the SEC modernized the integration framework.
More Sponsors are Choosing Side-By-Side
Part of the reason sponsors become interested in side-by-side structures is that successful capital raising rarely follows a straight line. Additionally, their investor networks only go so far before the capital needs outpace the network’s investment appetite.
Many sponsors begin raising capital from people they already know. Friends, family, business contacts, prior investors, and referral relationships often form the foundation of the first few offerings.
New investors discovered through public-facing marketing efforts require a completely different approach. Sponsors then expand their marketing by creating social media content, speaking at events, appearing on podcasts, sending newsletters, and hosting webinars.
The challenge is that both groups of investors often look very different from one another. Existing relationship investors may have known the sponsor for years and become comfortable investing through traditional private placement structures. These investors already know, like, and trust the sponsor, leading to faster investing decisions.
That is why side-by-side offerings have started attracting attention. Rather than viewing relationship-based fundraising and broader marketing efforts as competing strategies, some sponsors have begun exploring whether separate offerings can be used to serve different investor audiences while still supporting the same syndicated asset or business capitalization.
The attraction is not avoiding compliance requirements. The attraction is creating flexibility while still operating within the securities framework.
Why Integration Has Historically Been a Concern
To understand why side-by-side offerings generate so much interest, it helps to understand where the concern originated.
Historically, securities attorneys spent considerable time evaluating whether multiple offerings should be integrated and treated as a single offering. The concern was fairly straightforward. If two offerings were viewed as one combined offering, the requirements of one exemption could potentially interfere with the validity of another. This issue became particularly important when general solicitation entered the conversation.
Rule 506(b) generally prohibits general solicitation (i.e., online marketing). Rule 506(c), on the other hand, was specifically designed to permit general marketing provided the issuer follows accredited investor verification requirements. Sponsors naturally began asking whether both approaches could exist around the same investment opportunity without creating problems.
For many years, the practical answer was often conservative. Sponsors were frequently advised to keep offerings separated by time, investor groups, or marketing activities. As a result, a generation of sponsors grew up hearing some version of the same message: pick your exemption and stay within its boundaries.
That advice was correct given the regulatory environment at the time. Then the capital-raising environment evolved.
Today’s sponsors are building audiences through podcasts, YouTube channels, newsletters, social media platforms, conferences, and educational content. At the same time, many continue maintaining long-standing investor relationships that remain an important source of capital.
What Changed?
One of the most significant developments came through the SEC’s modernization of exempt offering regulations and the adoption of Rule 152. Most sponsors, and even securities attorneys, have never read Rule 152, nor should they be expected to. What matters is understanding the practical impact the rule has on offering integration.
Under the modern framework, the analysis shifted away from simply asking whether multiple offerings existed at the same time. Instead, greater emphasis is placed on whether each offering independently satisfies the requirements of its exemption.
That distinction may sound technical, but it has meaningful consequences. The conversation is no longer simply, “Are there two offerings?” The conversation is now, “Does each offering independently comply with the requirements that apply to it?”
For sponsors, that shift created considerably more flexibility than many people realize. Many sponsors are surprised to discover that the law evolved while much of the industry conversation remained largely the same.
What Is a Side-by-Side Offering?
At a high level, a side-by-side offering is exactly what it sounds like.
Rather than relying on a single securities exemption, separate offerings may operate simultaneously while pursuing the same overall business objective, investment strategy, or acquisition. The offerings remain separate. The investor qualification standards remain separate. The offering documents remain separate. The compliance obligations remain separate.
What may be shared is the underlying opportunity or asset acquisition. That distinction is important because people often assume side-by-side offerings involve combining exemptions into a single offering. That is not the concept being discussed.
Instead, sponsors are maintaining separate offerings that independently satisfy their own requirements while ultimately supporting the same project, fund, business plan, or acquisition strategy. The separation is not incidental.
How 506(b) and 506(c) Can Work Together
One of the most common examples involves Rule 506(b) and Rule 506(c).
Many sponsors spend years building investor relationships before ever launching a public-facing marketing campaign. They build trust with friends, family, business associates, prior investors, and referral relationships. Those relationships often become the foundation of their early capital raises. Inevitably, sponsors need more capital than what their investor network can continue meeting.
Sponsors begin appearing on podcasts. They launch YouTube channels. They attend conferences. They create educational content. They develop marketing systems designed to reach investors outside their immediate network.
The challenge becomes figuring out how to maintain those long-standing relationships while simultaneously embracing broader marketing opportunities. This is where side-by-side structures begin attracting attention.
Provided all rule requirements are maintained, relationship-based investors may participate through one offering structure while publicly marketed accredited investors participate through another. The offerings remain separate, but both may ultimately support the same investment objective.
For many sponsors, the realization that this type of flexibility may exist is what makes the conversation so valuable.
The Compliance Requirements Do Not Go Away
One of the biggest mistakes a sponsor can make is viewing side-by-side offerings as a shortcut around securities regulations. They are not.
In many respects, the additional flexibility makes legal structuring even more important. Investor qualification procedures still matter. Offering documentation still matters. Marketing activities still matter. Compliance oversight still matters.
Every exemption involved in the structure must continue satisfying its own requirements throughout the life of the offering.
That reality is one of the reasons experienced securities counsel becomes particularly important when side-by-side structures are being considered. The goal is not simply to launch multiple offerings. The goal is to ensure all offerings maintain their respective investment compliance criteria.
Flexibility and compliance are not competing objectives. They go hand in hand.
Why More Sponsors Are Exploring Side-by-Side Structures
The fundraising landscape continues to change. Sponsors are building audiences in ways that would have been difficult to imagine twenty years ago, including podcasts, newsletters, and webinars. At the same time, relationship-based fundraising remains the easiest way to raise capital quickly. Relationship-based investors already know, like, and trust sponsors for more rapid investment decisions.
Side-by-side offerings are attractive because they support both approaches. Sponsors are no longer forced into viewing relationship-based fundraising and broader marketing efforts as mutually exclusive strategies. Instead, they can evaluate whether different investor groups are better served through different offering structures while still supporting the same overall business objective.
The discussion is not about abandoning relationships in favor of marketing. Nor is it about ignoring modern marketing opportunities in favor of traditional networking. Instead, it is about recognizing that different investor groups may fit within different offering structures while still supporting the same overall objective.
Now sponsors don’t necessarily need to choose between Reg D Rule 506(b) or Rule 506(c).
Final Thoughts
Many sponsors still believe they must choose between relationship-based fundraising and broader marketing efforts. In some situations, that may be true. In others, the modern securities framework provides more flexibility than many people realize.
Side-by-side offerings are not appropriate for every sponsor, every transaction, or every investment strategy. They require careful planning, thoughtful structuring, and ongoing compliance oversight. Most importantly, they require understanding that each offering must continue standing on its own.
When properly designed, however, these structures may allow sponsors to maintain long-standing investor relationships while simultaneously pursuing broader fundraising opportunities through separate offering frameworks.
If you’re exploring a Rule 506(b), Rule 506(c), Regulation Crowdfunding, feeder fund, syndication, or other securities offering structure and would like to discuss your options, feel free to schedule a consultation with our team.
Attorney Advertising. This article is for educational purposes only and is not legal advice.