An accredited investor is someone the SEC treats as able to bear risk in private markets—typically through wealth, income, or professional role—unlocking access to most venture and private fund offerings.

How it works

For individuals, common paths include annual income above roughly $200,000 (or $300,000 with a spouse) in recent years, or net worth over $1 million excluding a primary residence. Entities such as banks, insurance companies, and funds above a size threshold also qualify. Rules evolve—professional certifications and knowledgeable employees of private funds have expanded paths in recent amendments.

Issuers rely on accreditation for Reg D exemptions like 506(b) and 506(c). Self-certification may suffice in some 506(b) contexts; 506(c) requires verification. Crowdfunding and Reg A+ offerings use different investor limits.

Why it matters

• Founders: Your SAFE and note rounds should document investor accreditation to protect the exemption. Platforms like AngelList often handle verification for syndicates.
• Investors: Accreditation is a gate, not a skill badge. Private deals still need diligence on team, terms, and portfolio fit.
• GPs: LP admission documents include accreditation representations; bad process can force messy rescissions.

Common mistake

Assuming a friend “should qualify” because they are wealthy without documentation. Net worth math excludes home equity; income must be stable, not a one-time bonus.

Related ideas

Regulation D, 506(c) verification, qualified purchaser (a higher bar for some funds), and Form D filings.