» Define Accredited Investor
Last Updated on November 4, 2021 by John Fischer
Define accredited investor: “Accredited investor” is a term that means a person who qualifies as a sophisticated investor – anyone with over $1 million in assets – and is subject to different rules and regulations than everyone else. For instance, they’re not allowed to put less than 10% of their net worth into speculative investments like day trading or casinos. In the United States, accredited investors are required by law to file an annual report with the Securities and Exchange Commission (SEC), which shows how much they own, their income from those investments, their expenses from those investments, as well as what other types of securities they hold.
Why should my investors be accredited?
If you’re trying to raise money from investors, you’ll want to consider bringing in accredited investors. This population of investors looks at your business differently than others. They’re more likely to know about your venture because they already know other people who are in business. They also tend to be more sophisticated in their investment decisions.
So who can own an investment?
It’s not necessarily very hard for someone to show that they qualify as an accredited investor. Anyone with over $1 million in assets can earn the title, though this is rarely a very large portfolio for someone starting out with a small business idea that might take several years to become self-sustaining. It’s more likely you’ll have to spend some extra time explaining what type of business you’re going into and how it will work.
What if I’m just starting out?
If someone is just starting out, the chances of them being able to get an accredited investor can be a little difficult. In these cases, it may be possible for someone to have a parent or a family friend who is an accredited investor help sponsor their idea from the beginning. This will help keep a new entrepreneur from running into any snags when trying to attract attention from potential investors. You can also purchase accredited investor leads right here at AccreditedInvestorLeads.com.
Approaching an accredited investor: If you’re going to approach an accredited investor about your business idea, make sure that you put together a solid pitch.
Let’s define accredited investor one more time. An accredited investor is a person who is wealthy enough to make him or her an expert in making long-term investments. The SEC requires people with $1 million or more in net worth to file an annual report with the Securities and Exchange Commission (SEC). Restricted investors can’t invest more than 10 percent of their net worth into speculative investments like day trading or casinos.
How do I find accredited investors?