Accredited investor: definition, requirements & how to qualify

Accredited Investor Definition and Purpose

Legally, an accredited investor is an individual or entity that meets certain financial or sophistication thresholds set by the SEC. (SEC)

For individuals, the core accredited investor qualifications are:

• Income: High, stable earnings over several years.
  
  
• Net worth: At least $1 million in net assets, excluding your primary home.
  
  
• Professional qualifications: Certain FINRA licenses or specific roles in private funds. (SEC)

For entities (such as trusts, funds, or corporations), the rules focus on assets, structure, and who owns or manages them.

Why does this concept exist?

Private offerings come with:

• Less disclosure than public stocks,
  
  
• Higher risk and illiquidity,
  
  
• Larger investment minimums.
  
  

The SEC’s view is simple: if you have enough wealth or sophistication, you’re better positioned to understand and absorb those risks without the same protections non-accredited investors receive. For a deeper look at the private-company regulatory landscape behind these guardrails, see SEC rules for private companies: what every investor should know.

In 2020, the SEC expanded the definition. It added new ways to qualify based on professional licenses (Series 7, 65, 82), “knowledgeable employees” of private funds, and additional entity types such as certain family offices. (SEC)

Accredited investor requirements

There’s no REAL ID equivalent to ascertain accredited investors.

Instead, you qualify if you meet one or more of the accredited investor requirements below, and platforms or fund managers verify that status when you try to invest.

Quick comparison: individuals vs. entities

We also covered the differences among accredited investors, qualified clients, and qualified purchasers, which might be of interest to you if you are an accredited investor (Augment Manual). Here’s the full breakdown: accredited investor vs qualified client vs qualified purchaser: what’s the difference. Let’s unpack the individual accredited investor qualifications in more detail.

H3: Income test

You may qualify as an accredited investor if your earned income is:

• Over $200,000 per year individually, or
  
  
• Over $300,000 per year with a spouse or spousal equivalent,
  
  

For each of the last two years, with a reasonable expectation of earning at least that much this year. (SEC) 

A few notes:

• “Income” here usually means earned income (salary, bonuses, self-employment), not just investment gains.
  
  
• You generally demonstrate this with tax returns, W-2s, 1099s, or similar documentation.

H3: Net worth test

You can also qualify based on your net worth:

• Your individual or joint net worth must be over $1 million,
  
  
• Not counting your primary residence as an asset. (SEC)

Key details:

• Net worth = total assets – total liabilities.
  
  
• You exclude the market value of your primary home.
  
  
• In some cases, recent increases in home-secured debt may count as liabilities in the net worth calculation. (SEC)
  
  

Documentation often includes: brokerage statements, bank statements, evidence of private business ownership, and a recent consumer credit report.

H3: Professional credentials and other paths

Since 2020, accredited investor requirements include professional-knowledge pathways, not just wealth.

You may qualify if you:

• Hold certain FINRA licenses in good standing, such as Series 7, Series 65, or Series 82. (SEC)
  
  
• Are a “knowledgeable employee” of a private fund, investing in that fund’s offerings (for example, certain investment professionals working at the fund). (SEC) 

These paths reflect a simple idea:
If you work in the markets every day, you may have enough financial sophistication to handle private deals, even if you’re not yet ultra-wealthy.

H2: Examples of accredited investors

Because the definition is financial, accredited investors come from a wide range of backgrounds. Examples include, but are not limited to:

• High-earning professionals such as senior engineers, doctors, lawyers, tech sales leaders, and startup employees with large bonuses.
  
  
• Founders and executives whose equity stakes or exits push their net worth above $1 million.
  
  
• Small-business owners with substantial retained earnings or business equity.
  
  
• Investors with inherited wealth or large concentrated stock positions.
  
  
• Trusts, family offices, and holding companies that meet the entity tests.
  
  

Many people quietly qualify as accredited investors without realizing it, especially after years of saving, market gains, or equity compensation.

H2: Types of investments accessible to accredited investors

If you meet accredited investor qualifications, a wider universe of private investments opens up. Common examples:

• Private equity and venture capital funds
  
  
  
  • Pooled vehicles invest in later-stage companies, buyouts, or early-stage startups.
    
    
  • Long lock-ups, high minimums, and limited liquidity.
    
    
• Hedge funds and private funds
  
  
  
  • Flexible strategies (long/short, macro, credit, derivatives).
    
    
  • Often charge performance-based fees and restrict redemptions.
    
    
• Private placements and direct deals
  
  
  
  • Direct investments into specific companies or projects under exemptions like Regulation D.
    
    
  • Includes structured deals, convertibles, or secondary share blocks in late-stage companies.
    
    
• Angel investing and startup crowdfunding
  
  
  
  • Direct investments into early-stage startups, often via syndicates or SPVs.
    
    
  • High risk, high dispersion of outcomes, very illiquid.
    
    
• Real estate syndications and private REITs
  
  
  
  • Group investments into single properties or portfolios.
    
    
  • Often focused on income plus appreciation, but with leverage and project-execution risk.
    
    

At Augment, much of this lives inside the private secondary markets, for example, buying and selling shares in late-stage private companies via our marketplace or participating alongside other investors through the Collective and featured company lists like The Power 20. 

H2: How to become or verify as an accredited investor

Here’s the twist:
You don’t “get certified” once and for all. You become an accredited investor the moment you satisfy one of the SEC tests, and the platform or fund you’re investing through is willing to rely on that.

In practice, the process looks like this:

1. Self-check the requirements

First, run your own numbers:

• Income test: Check your last two tax years (e.g., 1040 forms, W-2s).
  
  
• Net worth test: List your assets and liabilities, excluding your primary residence.
  
  
• Professional credentials: Confirm any qualifying licenses (Series 7, 65, or 82) are active.
  
  

This gives you a rough answer to the question of “how to become an accredited investor” in the eyes of platforms and fund managers.

2. Provide documentation

When you try to invest, the platform or manager will typically verify your status using one of the following:

• Income verification:
  
  
  
  • Recent tax returns, W-2s, 1099s, or pay stubs.
    
    
• Net worth verification:
  
  
  
  • Brokerage and bank statements, private investment statements, plus a credit report.
    
    
• Third-party letter:
  
  
  
  • A written confirmation from a CPA, attorney, investment adviser, or broker-dealer stating you meet accredited investor requirements.
    
    

Fintech platforms (such as private-market marketplaces and investment apps) often streamline this process with guided flows, integrations, and the option to reuse a verification for multiple deals. If you’re comparing platforms, here’s a practical framework for how to find the best pre-IPO investment platform.

3. Expect periodic re-checks

Your accredited status isn’t carved in stone.

Platforms may:

• Ask for updated documents after a set period, or
  
  
• Require fresh verification for new investments, especially income-based ones.
  
  

If your income falls significantly or your net worth drops, you may no longer qualify.

H2: Preparing to qualify as an accredited investor

Not accredited yet, but aiming to get there?
Here are some practical, non-gimmicky ways to move closer over time.

1. Build income intentionally

Higher income isn’t just about a bigger number; it’s about career and skills:

• Negotiate promotions and role changes in your current company.
  
  
• Develop in-demand skills (technical, product, sales, leadership) that command higher compensation.
  
  
• Explore equity-heavy roles where stock grants could meaningfully increase your long-term net worth.
  
  

2. Grow net worth strategically

Net worth grows through savings rate + investment returns – debt drag:

• Keep a meaningful gap between what you earn and spend.
  
  
• Use diversified, long-term investments (public markets, retirement accounts) to compound.
  
  
• Pay down high-interest debt that weighs on your balance sheet.
  
  

The accredited investor net worth test is a milestone, not the finish line.
Rushing into concentrated private deals before your financial foundation is solid can backfire.

3. Consider Professional Pathways

If you work in finance or want to, one route to becoming an accredited investor is via professional credentials:

• Earning and maintaining applicable licenses (Series 7, 65, or 82) can help. (SEC)
  
  
• Building a career inside an investment firm may also qualify you as a knowledgeable employee for that firm’s private funds.
  
  

These paths take time, exams, and real-world experience, but they can provide both income and qualification benefits.

4. Level up your risk management

Being accredited doesn’t magically make investments safer.
It just gives you more ways to be wrong if you don’t understand what you’re buying.

Before allocating to private deals:

• Build a basic plan around liquidity needs, time horizon, and diversification.
  
  
• Decide what percentage of your net worth you’re comfortable putting into illiquid, high-risk assets.
  
  
• Read the offering documents and ask questions. If you don’t understand the downside, treat that as a red flag.
  
  

Accredited vs. non-accredited investors

You can think of accreditation as an extra “lane” in the investing highway, not a higher species of human.

Comparison at a glance

Fintech has started blurring the lines. Some platforms create structures that let non-accredited investors participate in specific alternative strategies under different exemptions. In contrast, others (such as Augment) focus primarily on providing accredited investors with efficient access to private secondaries.

Either way, the direction of travel is clear:
More investors, more access, more responsibility.

Final Thoughts

Becoming an accredited investor doesn’t mean you “won” investing.
It means the SEC assumes you can handle more complexity and more risk without the same guardrails.

Accreditation can:

• Open doors to private equity, venture capital, hedge funds, and private secondaries.
  
  
• Offer unique return and diversification opportunities, and meaningful downside risk.
  
  

If you’re already accredited, use that access carefully and deliberately.

If you’re working toward it, focus on strong financial habits, thoughtful career moves, and genuine financial literacy, not just crossing a threshold number.

To keep learning about private markets and the companies shaping the new economy, explore Augment’s marketplace, dig into offerings from the Collective, and check out lists like The Power 20 for context on notable private names.