[rprasad]

You are not misinterpreting Reg D, but you haven't looked at the exceptions. There are numerous exemptions to Reg D, including the Intrastate Exemption and the Private Placement Exemption (usually, both of those are at play when dealing with angel VCs. These exemptions do not require accredited investors; otherwise, nobody could ever offer equity to anybody without registering with the SEC.

It's complicated, but the exemptions generally apply to the majority of equity offerings. It is usually only a problem when you are attempting to publicly offer equity. This was the primary obstacle to crowdfunding until the Crowdfunding Act was passed earlier this year.