Put simply, Regulation D is a means for a small business to sell stock through a direct public offering (DPO). It comes to us from a section of US Federal Securities Law, allowing small business different avenues to raise capital. Through the use of a DPO, a small business is able to sell stock directly to investors without the costly use of a broker or an underwriter. Basically, they are getting the benefits of offering stock without the hassle of going public, as is the case in an initial public offering (IPO).

DPOs, private placements of stock and other such benefits and exemptions allow small businesses a faster, less expensive route towards raising capital. The savings in costs is the primary advantage of using a DPO vs. an IPO. For example, in the case of an IPO, underwriters can charge up to 13 percent of the proceeds of the sale of securities, whereas with a DPO, it is more along the lines of 3 percent. That alone is a huge savings. These DPOs are generally long-term investment and this helps the small business owners not feel stress to deliver short term expectations.