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accredited investor

Written byKarl Montevirgen
Karl Montevirgen
Karl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies/writing and music composition from the California Institute of the Arts.
Fact-checked byThe Editors of Encyclopaedia Britannica
The Editors of Encyclopaedia Britannica
Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.
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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.

Karl Montevirgen