What is an Accredited Investor?

An “accredited investor” is a status defined by the SEC to describe someone legally allowed to invest in certain investment offerings – including offerings conducted under Rule 506 of Regulation D. Individuals and entities qualify as accredited investors if they meet certain income or net worth thresholds.

Under today’s federal securities laws, only individuals and entities that qualify as an accredited investor can legally take advantage of startup investing opportunities under minimal limitations. Because of accredited investors’ presumed wealth, they are deemed more able to bear the high financial risk of investments in private companies.

As of December 8, 2020, the definition of an “accredited investor” for the purposes of investing in certain private capital has been expanded. Do you qualify under the new definition to access additional private investment opportunities? Let’s take a look at what an accredited investor is.