What is an accredited investor?
Access to most private-market investments is restricted by law to accredited investors. Here's what that means, how you qualify, and what self-reporting actually entails.
Pre-IPO Atlas does not verify accredited investor status. When a quiz or form asks about your status, you are self-reporting. Under Rule 506(c), issuers who broadly solicit investors must take reasonable steps to verify accredited status — that is the issuer's responsibility, not a quiz on an educational website.
The SEC definition
The Securities and Exchange Commission defines an accredited investor as an individual or entity that meets certain financial thresholds or holds qualifying professional credentials. The purpose of the accreditation standard is to restrict private placements to people who are presumed to have sufficient financial sophistication and the capacity to absorb potential losses.
Individual qualification criteria
An individual may qualify as an accredited investor through any of the following:
Net worth threshold
Net worth exceeding $1 million, individually or jointly with a spouse or spousal equivalent, excluding the value of your primary residence.
Income threshold
Individual income exceeding $200,000 in each of the two most recent calendar years, with a reasonable expectation of the same income level in the current year. Or $300,000 joint income with a spouse or spousal equivalent.
Professional credentials
Holding in good standing a Series 7, Series 65, or Series 82 license, or other credentials as designated by the SEC. This category was added in 2020 to recognize financial sophistication beyond wealth alone.
Knowledgeable employees
Certain "knowledgeable employees" of a private fund, including executive officers, directors, trustees, and general partners, or employees who participate in the investment activities of the fund.
Entity qualification criteria
Entities may also qualify as accredited investors. Common entity categories include:
- Banks, registered investment advisers, and broker-dealers
- Entities with total assets exceeding $5 million (not formed for the specific purpose of acquiring the offered securities)
- Private business development companies
- Any entity in which all equity owners are accredited investors
- Family offices with at least $5 million in assets under management
What self-reporting means
When you check a box on a form indicating you are an accredited investor, you are self-reporting. You are attesting to your status based on your own knowledge of your financial situation. The educational quiz on this website does the same: it captures your self-reported status, not a verified one.
Under SEC Rule 506(b), an issuer can rely on an investor's self-certification. Under Rule 506(c) — which allows issuers to broadly advertise — the issuer must take reasonable steps to verify accredited status through third-party documentation such as tax returns, W-2s, bank statements, or a letter from a licensed professional.
Why this matters for pre-IPO investing
Nearly all private placements, SPVs, and pre-IPO funds are offered only to accredited investors. If you are not accredited, you are generally ineligible to participate regardless of your interest. If you are accredited, that is a necessary condition — not a sufficient one. Understanding the investment, the structure, the fees, and the risks is a separate requirement that no legal threshold satisfies for you.
Pre-IPO Atlas is not a legal or financial advisor. If you are uncertain about your accredited investor status, consult a licensed attorney or financial professional before participating in any private placement.