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Glossary

Accredited Investor

Definition

An accredited investor is a person or entity that meets income, net-worth, or professional-credential thresholds set by the SEC, qualifying them to invest in private securities that aren't registered with regulators. For individuals, the main tests are $200,000 in annual income ($300,000 jointly with a spouse) over the past two years, or $1 million in net worth excluding a primary residence. Most angel deals are open only to accredited investors.

The thresholds are the practical gate to angel investing. You qualify if your income has been at least $200,000 (or $300,000 with your spouse) for the last two years with the expectation it continues, or if your net worth exceeds $1 million excluding the value of your home. Since 2020 you can also qualify by credential rather than money — holding an active Series 7, 65, or 82 license counts — which opened the door to finance professionals who are knowledgeable but not yet wealthy.

The reason this matters is that nearly every SAFE, convertible note, and priced seed round relies on a securities exemption (most often Regulation D, Rule 506) that limits the deal to accredited investors. In practice you'll self-certify your status when you invest, and for some deals the company or syndicate may verify it with documents like tax returns or a letter from your accountant. Being accredited is the entry ticket; the next tier up, the qualified purchaser, unlocks access to larger private funds with looser investor-count limits.

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