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Fundraising & equity

Accredited investor

An accredited investor is a person or entity the SEC lets participate in private, unregistered securities offerings, the SAFEs and priced rounds most startups raise.

Updated July 2026

Key takeaways

  1. An accredited investor is a person or entity the SEC lets participate in private, unregistered securities offerings, the SAFEs and priced rounds most startups raise.
  2. Most startup fundraising relies on exemptions (like Rule 506(b) and 506(c)) that assume your investors are accredited.

What is accredited investor?

An accredited investor is a person or entity the SEC lets participate in private, unregistered securities offerings, the SAFEs and priced rounds most startups raise. Individuals qualify by meeting SEC income or net-worth thresholds, or by holding certain professional credentials. The idea is that they can absorb the risk of illiquid, high-risk private investments.

Why it matters for fast-growing companies

Most startup fundraising relies on exemptions (like Rule 506(b) and 506(c)) that assume your investors are accredited. Taking money from non-accredited investors without the right structure can create securities-law headaches later. Before you accept a check, confirm the investor qualifies, it's one of the first things your lawyer will ask.

Frequently asked questions

How does someone prove they're accredited?+
In a 506(b) round, self-certification via a questionnaire is common. In a 506(c) round, where you can publicly advertise the raise, you must take reasonable steps to verify, using tax documents, brokerage statements, or a letter from their CPA, lawyer, or a verification service. Your counsel picks the path.
Can I raise from non-accredited investors?+
Sometimes, through equity crowdfunding (Regulation CF) or Regulation A+, which allow non-accredited investors within limits. But standard SAFE and priced rounds lean on accredited-only exemptions because they're simpler and cheaper. Mixing in non-accredited investors adds disclosure requirements, so most founders keep early rounds accredited-only unless crowdfunding is the plan.

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