What is the role of Accredited Investors?
As companies raise capital, the accredited investor definition heavily influences their pool of potential investors, and as investors, the definition determines their eligibility to invest in many early-stage startups. A number of federal securities laws limit participation in offerings to accredited investors or contain restrictions on nonaccredited investors’ participation.
What are the requirements to become accredited?
Accredited investors (i.e., natural persons) are determined based on their wealth, income, and other financial sophistication measurements.
How can entities become accredited?
The structure or assets of the entity may determine whether the entity qualifies as an accredited investor.
Owners as Accredited
This resource represents the views of the staff of the Office of the Advocate for Small Business Capital Formation. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This resource, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.
Modified: April 28, 2022