The U.S. Securities and Exchange Commission (SEC) has outlined the financial, professional and organizational criteria that can allow investors to qualify as accredited investors in the United States.
The designation is important in private-market investing because certain securities offerings and exemptions from federal registration restrict participation based on whether an investor meets the accredited investor definition.
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What Is an Accredited Investor?
An accredited investor is generally an individual or organization that meets specific requirements established under U.S. securities regulations.
For companies raising money privately, the definition can affect which investors may participate in certain offerings. For investors, it can determine whether they are eligible to access particular private investment opportunities.
The SEC’s small-business resource was reviewed on April 24, 2026.
Financial Requirements for Individuals
One common route is based on personal finances.
An individual may qualify by having a net worth above $1 million, either alone or together with a spouse or partner, while excluding the value of the person’s primary residence from that calculation.
Another route is based on income. An individual can qualify with annual income above $200,000, while the threshold is $300,000 for income combined with a spouse or partner. The income requirement applies to each of the previous two years, along with a reasonable expectation of reaching the same level during the current year.
These financial tests are only part of the SEC’s broader definition.
Professional Experience Can Also Matter
Financial wealth is not the only way an individual may qualify.
The SEC also identifies certain investment professionals who hold qualifying securities-industry licenses, including Series 7, Series 65 and Series 82 credentials.
Certain people connected to the company raising capital may also fall within the definition. This can include directors, executive officers and general partners in qualifying circumstances.
Some knowledgeable employees of private funds and certain clients of qualifying family offices may also qualify.
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Businesses and Other Organizations
The accredited investor definition also applies to organizations.
For some entities, having more than $5 million in investments can satisfy the relevant requirement. Other qualifying organizations may use an asset-based test, depending on their structure and circumstances.
The SEC identifies several entity types that can qualify under applicable requirements, including corporations, partnerships, limited liability companies, trusts, certain charitable organizations, employee benefit plans and family offices.
An entity may also qualify when all of its equity owners are themselves accredited investors.
Financial Institutions May Qualify
Certain regulated financial organizations are included within the SEC’s accredited investor framework as well.
These include qualifying banks, insurance companies, registered investment companies, business development companies and certain small-business investment entities.
Registered or qualifying investment advisers and SEC-registered broker-dealers are also included among the categories identified by the SEC.
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Why the Definition Matters
Accredited investor status can be significant in the private securities market because some federal securities-law exemptions place limits on who can participate.
For businesses, these rules can influence the pool of potential investors available when raising private capital. For investors, understanding the definition can help determine whether they meet eligibility requirements for a particular offering.
This type of financial information can also be relevant to entrepreneurs evaluating different ways of building and funding a business.
Chavaiz has previously covered business opportunities such as WaterEquity’s investment activity, providing additional context on how organizations can deploy capital toward specific sectors.
Meeting an accredited investor definition does not mean that a particular investment is suitable or carries any guarantee of returns. Investors should review the terms and risks of an offering before committing capital.
SEC Guidance for Investors and Businesses
The SEC provides the accredited investor information as part of its educational resources for small businesses and investors.
Because eligibility can depend on an investor’s circumstances and the structure of an offering, individuals and businesses should review the applicable securities rules and seek qualified professional advice when necessary.
The accredited investor definition is therefore best understood as an eligibility framework rather than an endorsement of any particular investment.
Source
U.S. Securities and Exchange Commission (SEC)
Official SEC resource: SEC Accredited Investors
