What is an accredited investor?
Accredited investors meet standards defined securities regulators which allow them to invest in certain private securities offerings. Most startups raising money do so from accredited investors only. While the standard varies somewhat between countries, to invest on the AngelList platform you must at least meet US accreditation requirements.
The SEC web site contains the full definition under U.S. law. In general, you must meet one of the following standards:
- Individuals with annual income over $200K (individually) or $300K (with spouse) in each of the last 2 years and an expectation of the same this year
- Individuals with net assets over $1 million, excluding the primary residence (unless more is owed on the mortgage than the residence is worth)
- An institution with over $5 million in assets, such as a venture fund or a trust
- An entity made up entirely of accredited investors
Non-U.S. investors should review the standards under their local law. For example, the OSC web site contains the full definition of accreditation requirements that are also applicable to Canadian investors, which in general require meeting one of the following standards:
- Individuals with annual income over $200K CAD (individually) or $300K CAD (with spouse) in each of the last 2 years and an expectation of the same this year
- Individuals who, either alone or with a spouse, beneficially own financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1 million CAD.
- Individuals who, either alone or with a spouse, have net assets of at least $5 million CAD