There are other categories of accredited investors, including the following, which may be relevant to you:Īny trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, orĪny entity in which all of the equity owners are accredited investors. Has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). These offerings involve unique risks and you should be aware that you could lose your entire investment.Īn accredited investor, in the context of a natural person, includes anyone who:Įarned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR Unlike offerings registered with the SEC in which certain information is required to be disclosed, companies and private funds, such as a hedge fund or venture capital fund, engaging in these exempt offerings do not have to make prescribed disclosures to accredited investors. One reason these offerings are limited to accredited investors is to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering unnecessary the protections that come from a registered offering. Under the federal securities laws, only persons who are accredited investors may participate in certain securities offerings. What does it mean to be an accredited investor? Since then, unaccredited investors have been able to invest with as little as $100. In 2015, the SEC adopted all titles under the JOBS Act. The bill also raises the limit for securities offerings under Regulation A from $5 million to $50 million. It allows different forms of equity crowdfunding. It allows up to 500 unaccredited shareholders The bill increases to 2,000 the number of shareholders a company can have before it’s required to register common stock with the SEC. There are a few more additional benefits for private companies: The bill makes it easier for companies to go public or to raise private capital and stay private longer. In 2012, Barack Obama signed the Jumpstart Our Business Startups Act, or JOBS Act. In the past, pre-IPO investing was limited to accredited investors, private equity firms, hedge funds and a few other groups. Pre-IPO shares are not available to everyone. An IPO is when a company’s shares trade on a public market for the first time. Pre-IPO investing is when you invest in a private company before its initial public offering (IPO).

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