Accredited Investor

An accredited investor can be a commercial organization or an individual who is permissible to deal with securities that are not accessible to the masses and are not registered with the Securities and Exchange Commission (SEC). The Securities Act of 1933 grants Accredited status on any individual or entity if they:

  1. Have an individual annual income exceeding $200,000 or joint income of more than $300,000 together with a spouse in each of the prior two years. Further, the investor must also have reasonable expectations of the same for the current year.
  2. Have a net worth exceeding $1 million, either independently or together with a spouse. This excludes the value of the person’s primary residence.
  3. Be a general partner, executive officer, or director. Besides, you must be associated in a similar way to the issuer of a security that is open for investment.
  4. In the case of a private business institution, it must have more than $5 million in assets.
  5. If the institution consists of accredited investors as equity owners, the institution becomes accredited itself.

 

Further, in 2016, the U.S. Congress changed the definition of an ‘accredited investor’ to include registered brokers and investment advisors.

This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.