Under applicable securities laws, any offer or sale of a security must either be registered or meet an exemption. Regulation D, or “Reg D,” under the Securities Act of 1933, provides a number of exemptions from these registration requirements.
Venture capital funds rely on the exemptions in Rule 506 to raise money without having to meet certain registration requirements. However, under the “safe harbor” of Rule 506(b), one tradeoff is that fund managers cannot publicly market their funds.
The SEC website’s full definition of Rule 506 of Regulation D is available here.