Of course. Here is a comprehensive overview of the Accredited Investor requirements in the United States, based on the rules defined by the U.S. Securities and Exchange Commission (SEC).

The Core Concept

An Accredited Investor is a person or entity legally allowed to participate in investment opportunities not registered with financial authorities, such as private placements, hedge funds, venture capital, and angel investments. These are considered higher-risk, less regulated, and less liquid investments, so the SEC restricts them to investors who are presumed to have the financial sophistication and capacity to bear the economic risk.

How to Qualify as an Accredited Investor

The requirements are primarily based on income, net worth, or professional credentials. The rules were updated in 2020 to add new qualification pathways.

1. For Individuals (Natural Persons)

You must meet at least one of the following criteria:

A. Income Test

• Have an annual income of at least $200,000 (or $300,000 joint income with a spouse or spousal equivalent) for each of the last two years.


• You must have a reasonable expectation of earning the same or higher income in the current year.

• Have a net worth of at least $1,000,000, either individually or jointly with a spouse or spousal equivalent.


• Crucial Note: The value of your primary residence is NOT included in this calculation. Your mortgage and other debts on the residence are also not included as liabilities, unless the debt exceeds the fair market value of the residence.

• Hold in good standing one of the following professional certifications or designations:


• Series 7 (General Securities Representative)


• Series 65 (Investment Adviser Representative)


• Series 82 (Private Securities Offerings Representative)


• The SEC can also designate other credentials in the future.


• Knowledgeable Employees of a private fund (e.g., executives and directors) are also considered accredited for investing in their own fund.

• Be a "Knowledgeable Employee" of the private fund issuing the securities.


• Be a "Family Client" of a "Family Office" that meets the definition and whose assets under management are >$5 million. The family office itself must not have been formed solely to acquire the securities.

2. For Entities (Legal Persons)

Certain types of organizations are automatically considered accredited investors if they meet the following criteria:

A. Asset Test

• Any entity (including corporations, partnerships, LLCs, trusts, etc.) owning investments in excess of $5 million that was not formed for the specific purpose of investing in the securities offered.

• Banks, Insurance Companies, Registered Investment Companies, and Business Development Companies.


• Small Business Investment Companies (SBICs) licensed by the U.S. Small Business Administration.


• 501(c)(3) Organizations with total assets over $5 million.


• Indian Tribes, Governmental Bodies, and Employee Benefit Plans (if the plan has total assets over $5 million or if a qualified investment manager makes its investment decisions).


• Registered Broker-Dealers.


• Any entity in which all of the equity owners are accredited investors.

Why These Requirements Exist

The purpose is rooted in investor protection:

• Risk Mitigation: Unregistered securities (like startups and private equity) are extremely risky, illiquid, and have less disclosure. The SEC assumes accredited investors can withstand a total loss.


• Sophistication Assumption: The criteria are a proxy for financial sophistication—the ability to understand the risks and conduct necessary due diligence, either through personal wealth or professional credentials.


• Capital Formation: It allows companies, especially startups, to raise capital more easily from a pool of sophisticated investors without the immense cost and burden of a public offering.

How is Accreditation Verified?

Issuers of private securities are legally responsible for taking "reasonable steps" to verify that an investor is accredited. They cannot simply take your word for it. Common methods include:

• Reviewing Tax Returns: For the income test.


• Reviewing Bank/Brokerage Statements, Appraisals, and Credit Reports: For the net worth test.


• Receiving a Letter from a CPA, Attorney, or Registered Investment Adviser: Confirming the investor's status.


• Confirming Professional Licenses: For the Series 7, 65, or 82 pathway.

Important Considerations & Criticisms

• Self-Certification is Not Enough: You will be required to provide documentation.


• No Official "Accredited Investor" License or Registry: There is no government-issued card or central database. Your status is verified deal-by-deal by the issuer.


• Criticism: A common criticism is that the rules are overly reliant on wealth as a measure of sophistication, potentially excluding financially savvy individuals who don't meet the strict income or net worth thresholds.


• International Investors: Non-U.S. persons must also meet these criteria to invest in U.S. private offerings.

Summary Table for Individuals