accredited investor

Accredited investors are a category of high-net-worth individuals and certain financial entities that meet financial or professional criteria established by a regulatory authority, such as the Securities and Exchange Commission (SEC) in the United States. Accredited investors have the privilege of accessing certain asset classes and investments that are not accessible to the general public. This can include private equity investments, hedge funds, venture capital and early-stage investments, and other securities that may not be registered with financial authorities.

The rules defining accredited investor status were established to ensure individuals and entities have the necessary level of capital or financial sophistication to participate in the trading of high-risk, illiquid, minimally regulated, or unregulated markets. To qualify as an accredited investor in the U.S., you must have a net worth of $1 million (not counting the value of your primary residence), or an income exceeding $200,000 (individually) or $300,000 (individual and spouse combined) in each of the previous two years.

Alternatively, financial professionals may qualify as accredited investors under certain circumstances. Examples include executives of companies selling securities, certain family offices (or family clients), and “knowledgeable employees” of private funds, particularly those who hold a financial certification or professional license.