October 13, 2023
What is an Accredited Investor, and Am I One of Them?
If you are investigating investment options such as Shasta Power, you likely know that some opportunities are only available to accredited investors. What exactly is an accredited investor, and how do you become one? We’ll answer all your accreditation questions in this article. What is an accredited investor? Contrary to popular belief, an accredited investor …
If you are investigating investment options such as Shasta Power, you likely know that some opportunities are only available to accredited investors. What exactly is an accredited investor, and how do you become one? We’ll answer all your accreditation questions in this article.
What is an accredited investor?
Contrary to popular belief, an accredited investor is more than just someone who gets a badge. An accredited investor is a person or entity allowed to invest in securities not registered with the Securities and Exchange Commission (SEC). This usually means the investor has levels of wealth and financial achievements that allow them to take signifigant risks.
How do you know if you’re an accredited investor?
Requirements for individuals
To qualify for accreditation, you must meet the financial or professional requirements.
Financially, you can qualify for accreditation if:
- Your net worth is over $1M, excluding your primary residence, or
- Your income is over $200k by yourself or $300k with your spouse or partner for the two prior years and projected for the following year.
Alternatively, to meet the professional requirements, you must be in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82).
You also could be a director, executive officer, or general partner (GP) of the company selling the securities (or of a GP of that company); any “family client” of a “family office” that qualifies as an accredited investor; or a “knowledgeable employee” of a private investment fund.
Requirements for entities
Five different criteria determine the accreditation qualification for entities.
If your entity is a corporation, partnership, LLC, trust, or 501(c)(3), you must own investments or have assets over $5M. If you have an employee benefit plan, your entity must have a “family office” or any “family client” of that office.
Your entity also could qualify if all owners are accredited investors or investment advisors (SEC- or state-registered or exempt reporting advisers) and SEC-registered broker-dealers.
The final qualification option for your entity is if you are a bank, savings and loan association, insurance company, registered investment company, business development company, or small or rural business investment company.
How are accredited investors certified?
Investors who want accreditation must prove by themselves that they are qualified. A third-party verification service can easily handle the process; options include a letter from a licensed professional such as an accountant, money manager, or other tax professional, or the investor may provide their own documentation to the fund sponsor.
What are the benefits of being labeled an accredited investor?
Along with the accreditation status come opportunities. Once accredited, you can invest money directly into private equity, private placements, hedge funds, venture capital, and equity crowdfunding. The SEC also allows companies and private funds not to register certain investments if the assets are sold to accredited investors.
What should an accredited investor invest in?
As an accredited investor, you want to make wise decisions that increase your net worth and make the world a better place. You can consider investing in ESG, SRTI, or Impact portfolios, but you should also think about a private fund that truly improves the environment.
Consider investing with Shasta Power
We created the Summit Power Fund specifically for accredited investors. This solar fund connects you to your investment, increases your income, and positively impacts the world. You only have to put in a minimum of $50k—other investors in the Summit Power Fund are earning a 30% IRR on their investments!
Contact us and watch our free webinar about the fund to get started.