Accredited Investor Standards and Rules
Here's how to find out if you're an accredited or qualified investor to begin with Venture Capital and Private Equity.
For Accredited Investors, Qualified Purchasers & Sophisticated Investors and Institutions
Under the Securities and Exchange Commission (SEC) laws, only accredited investors are allowed to complete transactions with companies such as Angel Kings. Investing in startups is a high risk, but high risks yield high results! An investor must be accredited in order to ensure that you can bear the economic risks that are involved in funding startups. In order to qualify as an accredited investor, you must meet one of the following requirements. Here's is the definition of an accredited investor by the SEC:
(1) has an annual salary of $200K;
(2) has a net worth of $1 million or
(3) is a general partner, executive officer or director for the issuer.
The SEC's rules regarding "Accredited Investors" include the following...
Are You An Accredited Investor?
"An accredited investor, in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years.
In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:
- any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or
- any entity in which all of the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment."
Furthermore, according to the SEC:
"Under the federal securities laws, a company or private fund may not offer or sell securities unless the transaction has been registered with the SEC or an exemption from registration is available. Certain securities offerings that are exempt from registration may only be offered to, or purchased by, persons who are accredited investors. One principal purpose of the accredited investor concept is to identify persons who can bear the economic risk of investing in these unregistered securities."
You can begin investing in startups through our private equity funds:
Since the passage of the Jumpstart Our Business Startups Act (“JOBS Act”) in 2012, there has never been a better time to invest in startups and get started with venture capital. The doors are opening wider for investors to be a part of the new startup boom, and the conversations between investors and startups have never been so loud and public. The risk and potential reward have always been great. But those investors who keep their eyes open and listen can turn the risk and reward in their favor.
Startup and angel investing is the new frontier for you to make maximum investment returns on your money. In fact, the closed-door process of venture capital has changed over the recent years that you are now allowed to invest in a startup during the seed level and get access before it becomes an IPO. You also have the fortunate opportunity of positively impacting society.
Here are two examples of successful angel investors for you to consider. In August 2004, Peter Thiel wrote a $500,000 check for an angel investment in Facebook, giving him a 10.2% stake in the company. By the end of the company’s lockout period in August 2012, Thiel had pocketed $1 billion in cash, or thousands of times return on his initial investment.
Ronald Wayne co–founded Apple with Steve Jobs and Steve Wozniak. He received a 10% stake in Apple, which he sold for $800 two weeks later in April 1976. His 10% stake would have been worth more than $70 billion today.
Investing in Angel Kings puts you, the investor, in the best position to write a check, invest in the next Facebook and earn returns like Thiel.
How Does Angel Kings Invest in Startups?
You can make a lot of money and have fun investing in startups if can assess a startup and answer these following questions:
1. Does the Product or Service Solve an Actual Problem?
Most successful investors suggest sticking to what you know or staying in industries where you understand the business. Not only will that help you understand the market for the product but also you can more evaluate whether it is a real solution to a real problem.
3. Is There a Plan For Your Business?
You should also ask about the exit strategy and timing, and the founders must understand and actively support your need to earn a return on your investment. Unless your plan is to treat this cozy little company like a retirement hobby, the founders must actively support a mutually agreeable exit plan and timing. Otherwise, you can grow old before you see your money again.
2. Who Is on your Startup Team?
The founders and the startup team are important, but they may not have startup experience or business experience. You should spend time getting to know the team and observe how they handle themselves in various business situations. Notice what the office looks like, and ask about their plans to move or renovate as they grow.
4. What About the Startup's Financials?
If the company has been in operation, you should be able to see its financial statements to evaluate the team’s spending habits and use of funds. Both of those may change once the founders have millions of dollars in hand rather than just a Visa card, but you may get an inkling of the future.
5. Can You Afford the Loss?
Even with the right product, a brilliant plan and a stellar team with conscientious spending habits, things happen. There is always risk in investing, especially with startups. Before you hand over your hard earned cash, make sure you can afford the loss if you never got your money back.
Already a certified accredited investor?
Verify that you are a certified accredited investor or easily get your accredited investor certification here or complete the verification form from the U.S. Securities and Exchange Commission (Below).
Verify You're an Accredited Investor:
*Once you've completed this accredited investor verification form, we'll reach back to you within 48 hours. You can then begin investing in startups once your verified as an an accredited investor, qualified purchaser, or institutional investor.