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The Definition Of An Accredited Investor

Eric Wilson
June 18, 2020

Freedom Venture Investors must be accredited to participate in any offerings. So what does that really mean? An accredited investor is defined by the SEC and their guidelines can be found here. To break it down simply, you can follow some below general guidelines.

Accredited Investor's Requirements

Accredited investors are allowed to make investments directly into the world of equity crowdfunding, venture capital, hedge funds, private placements, and private equity.

Do you know whether you’re an accredited investor? People who can answer ‘yes’ to one or more of the following statements are qualified to be called accredited investors.

  • My individual net worth or our net worth including my spouse is over $1 million. The net worth calculation excludes my primary residence's value.
  • My annual personal income has been over $200,000 in the past two years, and the expectation is that it will remain above that threshold this year.
  • My annual income, together with that of my wife, has exceeded $300,000 in the last two years and anticipates that it will be the same this year or even exceed that figure.
  • I invest in the place of an investment company, or a business that has over $5 million in the form of assets and or all equity owners have been accredited.

Thus, you qualify to be an accredited investor if you meet one of these thresholds or all of them. Accredited investors have a chance to invest in placements that are non-registered and that are offered by firms such as venture capital firms, and private equity funds.