Since 2020, nearly all private funds - venture, private equity, credit, infrastructure, hedge - have raised under Rule 506(b).
Only a small fraction (roughly 5–12 %) have used Rule 506(c).
Rule 506(b): No public marketing. You rely only on pre-existing LP relationships.
Rule 506(c): Public solicitation is allowed, but you must verify every investor’s accredited status. It's legally sound, but administratively heavy. Most of our clients use in-line verification.
In shorthand:
506(b) = relationship capital.
Which path makes sense depends on your asset class, your fund stage, and how much personal bandwidth you’re willing to burn.
Who Uses 506(c):
Emerging managers, usually Fund I, sometimes Fund II/III, who need visibility. They lack an LP Rolodex, so 506(c) gives them permission to be really loud. Rolling funds, syndicates, and online-first GPs live here.
Who Uses 506(b):
By Fund II and beyond, most VCs go quiet again. Their LPs are known; discretion matters more than exposure. That said, we do see selective use of 506(c) among managers experimenting with broader accredited outreach, often to build retail-access feeder funds, market a thematic strategy publicly, or support parallel online syndicates. These are still the minority, but the line between traditional fundraising and digital distribution is beginning to blur.
Your Moves, by Stage:
Pre-Fund I → Capital OS Platform ($1 K/yr): Learn the frameworks and LP data that build credibility before your first close.
Fund I → Capital OS Premium ($7,875/yr): Join peers, share deal pacing, and build toward Fund II. This requires 2-2.5% of fund budget.
Fund II + → Capital OS Advisory ($50–60 K/yr): At this point, either your team executes systematically or you personally unblock every task (every LP follow-up, every pipeline review). Advisory installs the system so the firm moves without you.
Who Uses 506(c):
Almost no one. PE LPs are institutions and family offices who expect confidentiality rather than public solicitation.
Who Uses 506(b):
Everyone else. Private, relationship-based capital formation.
Your Moves by Stage:
Pre-Fund I → Platform: Map target LPs, clarify your positioning.
Fund I → Premium: Build repeatable fundraising habits.
Fund II + → Advisory: Build operational infrastructure around a real IR process. Otherwise, every deal update, every diligence packet, every LP conversation still routes through you. That’s the toll if you skip Advisory. This does not mean hiring an IR team, but instead designing nimble IR process and automation.
Who Uses 506(c):
Virtually nobody. Public solicitation adds risk with zero benefit.
Who Uses 506(b):
All credible managers. LPs here are insurance, pension, and family offices. This is relationship capital only.
Your Moves by Stage:
Pre-Fund I → Platform: Frameworks for early LP relationship sequencing.
Fund I → Premium: Peer structure and accountability.
Fund II + → Advisory: Operationalize pipeline management and investor reporting. Without it, the GP remains the bottleneck for every communication loop.
Who Uses 506(c):
Almost none. The investors - the sovereigns, the pensions, the strategics like DFIs - they view public solicitation as amateur.
Who Uses 506(b):
Everyone serious.
Your Moves by Stage:
Pre-Fund I → Platform: Refine thesis positioning for long-horizon LPs.
Fund I → Premium: Peer learning and relationship mapping.
Fund II + → Advisory: Execution management and IR cadence. Skip it, and you’re the one unblocking analysts at 11 PM before every LP meeting.
Who Uses 506(c):
A niche minority, say quant or retail-access feeder funds using digital platforms to reach accredited investors.
Who Uses 506(b):
Traditional discretionary managers. Quiet, relationship-driven, usually via prime-broker networks.
Your Moves by Stage:
Pre-Launch → Platform: Clarify structure and LP segmentation.
Fund I → Premium: Systematize outreach and investor communication.
Fund II + → Advisory: Build the operational backbone. Otherwise, the CIO doubles as the COO forever, and that’s the hidden cost.
Ask yourself:
Pre-Fund I? → Platform
Fund I closing or just closed? → Premium
Fund II +? → Advisory
Using placement agents or cold outreach as your core strategy? → Not ready
In every asset class, 506(b) is the norm; 506(c) is a niche.
506(b) rewards networks. 506(c) rewards visibility.
But in both cases, the same law applies: somebody's gotta to unblock the system.
If you’re not paying for structure, you are the structure.
That’s the toll.
Choose your leverage:
Capital OS Platform — $1 K/yr
Capital OS Premium — $7,875/yr
Capital OS Advisory — $50–60 K/yr (9 slots)
Raise capital systematically, not reactively. One way or another, the work gets done. The only question is whose calendar it costs.