How to Find Accredited Investors

What Accredited Investor Status Means

Accredited Investor Verification Methods

Documentation requirements: Tax returns (2 years showing income thresholds), financial statements (showing net worth), verification letters from CPAs, attorneys, or registered investment advisors. Documentation must be recent (within 90 days typically). Investors must provide documentation proving accredited status. Missing or outdated documentation doesn't qualify.

When verification required: Rule 506(c) requires verification for all investors. Rule 506(b) allows self-certification but investors must actually qualify. Verification reduces liability risk. Even for Rule 506(b), verification is recommended. Improper verification creates liability.

Third-party verification services: Services handle documentation collection and verification. Simplify process but add cost ($50-$200 per investor typically). Services provide: documentation review, verification letters, and compliance support. Useful for larger offerings with many investors. Evaluate cost vs. benefit.

CPA verification: CPAs can provide verification letters confirming income or net worth. CPA verification is acceptable for Rule 506(c). CPAs must review documentation and provide written verification. CPA verification adds credibility and reduces liability.

Attorney verification: Attorneys can provide verification letters confirming accredited status. Attorney verification is acceptable for Rule 506(c). Attorneys must review documentation and provide written verification. Attorney verification adds credibility and legal protection.

What varies: Verification requirements differ by exemption type and investor sophistication. Rule 506(c) requires verification. Rule 506(b) allows self-certification. Sophisticated investors may have simpler verification. Research requirements relevant to your exemption type.

Where to Find Accredited Investors

Professional networks: CPAs, attorneys, wealth managers maintain HNWI relationships. Most HNWIs are accredited. Facilitate introductions for qualified opportunities. Building relationships with professional advisors improves access. See our HNWI guide for professional network strategies.

Angel investor networks: Most angels are accredited. Networks provide access, due diligence support, and deal flow. Angel networks (Tech Coast Angels, Golden Seeds, Band of Angels) screen investors for accreditation. Networks provide verified accredited investors. See our angel investor guide for network details.

Syndication platforms: Real estate platforms (CrowdStreet, RealtyMogul) and startup platforms serve accredited investors. Platforms verify accreditation before allowing investment. Platforms provide access to verified accredited investors. Research platform verification processes.

Family offices: Family offices invest as accredited entities or through accredited individuals. Family offices provide access to accredited capital. See our HNWI guide for family office access strategies.

Industry associations: Some associations have accredited investor networks or directories. Research associations relevant to your industry. Associations may provide access to verified accredited investors.

What varies: Accredited investor access differs by industry, geographic location, and deal type. Major markets have more accredited investors. Some industries have more accredited investors. Research accredited investor concentration in your market and industry.

Compliance Requirements for Accredited Investor Deals

Regulation D exemptions: Rule 506(b) and 506(c) provide exemptions from SEC registration. Rule 506(b): up to 35 non-accredited sophisticated investors, no general solicitation. Rule 506(c): all accredited with verification, general solicitation allowed. Proper filing required (Form D). Missing filings create liability.

State requirements (blue sky laws): Vary by state. Notice filings or qualification may be required. Depends on investor locations. Some states have stricter requirements. Research state requirements before fundraising. Legal counsel helps navigate state requirements. Missing state compliance creates liability.

Disclosure requirements: Offering documents, risk factors, use of proceeds, financials, and business description. Missing disclosures create liability. Professional documentation protects both parties. See our due diligence guide for required documents. Disclosure requirements vary by exemption type and investor sophistication.

Ongoing reporting obligations: Some offerings require ongoing reporting (annual reports, financial updates). Requirements vary by exemption type and investor agreements. Understand reporting obligations before fundraising. Missing reporting creates liability and damages relationships.

Legal counsel essential: Securities violations carry serious penalties (fines, disgorgement, injunctions). Legal counsel helps: structure offerings properly, ensure compliance, and protect interests. Don't skip legal counsel to save costs. Improper structures create significant liability. See our due diligence guide for legal considerations.

What varies: Compliance requirements differ by exemption type, investor types, geographic locations, and offering size. Rule 506(b) vs. 506(c) have different requirements. State requirements vary. Research requirements relevant to your offering structure and locations.

Non-Accredited Investor Limitations and Options

Rule 506(b) non-accredited option: Allows up to 35 non-accredited sophisticated investors. No general solicitation allowed. Additional disclosure requirements (financial statements, business description, risk factors). Sophistication requirement: investors must have knowledge and experience in financial matters. Non-accredited investors add complexity but broaden investor base.

Sophistication requirement: Non-accredited investors must have knowledge and experience in financial matters. Issuers must reasonably believe investors are sophisticated. Sophistication can be demonstrated through: education, work experience, investment experience, or professional advisors. Unclear sophistication creates liability risk.

Additional disclosure requirements: Non-accredited investors require more disclosure: financial statements (audited if available), detailed business description, risk factors, and use of proceeds. Additional disclosure adds cost and complexity. Evaluate whether non-accredited investors justify additional requirements.

Tradeoffs: Non-accredited offerings have restrictions (no general solicitation) but broader investor base. Accredited-only offerings simpler but limited pool. Evaluate tradeoffs based on investor needs and offering requirements. Most offerings use accredited-only for simplicity.

Regulation A+ alternative: Allows non-accredited investors with SEC qualification. More complex and expensive than Reg D. Requires: SEC filing, ongoing reporting, and state compliance. Reg A+ works for larger offerings ($20M-$75M) wanting broader investor base. Evaluate Reg A+ if non-accredited investors essential.

What varies: Non-accredited investor options differ by exemption type and offering size. Rule 506(b) allows non-accredited with restrictions. Reg A+ allows non-accredited with SEC qualification. Research options relevant to your offering needs.

Preparing Accredited Investor Offerings

Offering documents: Private placement memorandum (PPM), subscription agreement, operating agreement (if applicable), and investor questionnaire. Documents must include: business description, risk factors, use of proceeds, financials, and terms. Professional documentation protects both parties. Legal counsel essential for document preparation.

Verification systems: Processes for collecting and verifying accredited investor documentation. Systems should: collect documentation, verify accuracy, store securely, and maintain records. Proper verification systems reduce liability and ensure compliance. See our due diligence guide for verification processes.

Investor communications: Clear communication about: offering terms, risks, use of proceeds, and investor rights. Regular updates (quarterly or annually) maintain investor relationships. Professional communication builds trust and reduces liability. See our outreach templates for communication strategies.

Compliance tracking: Systems for tracking: investor accreditation status, verification dates, documentation expiration, and reporting obligations. Proper tracking ensures ongoing compliance. Missing tracking creates liability. Use CRM or compliance software for tracking.

Legal structure: Entity structure (LLC, corporation, partnership) affects compliance requirements. Some structures simplify compliance. Others add complexity. Legal counsel helps choose appropriate structure. See our due diligence guide for legal structure considerations.

What varies: Preparation requirements differ by exemption type, offering size, and investor types. Rule 506(b) vs. 506(c) have different requirements. Larger offerings require more preparation. Research requirements relevant to your offering structure.

Common Accredited Investor Compliance Mistakes

Improper verification: Not verifying accredited status or accepting self-certification for Rule 506(c). Rule 506(c) requires verification. Improper verification creates liability. Use proper verification methods (documentation, CPA letters, attorney letters, or third-party services).

Missing SEC filings: Not filing Form D or filing incorrectly. Form D required for Reg D offerings. Missing or incorrect filings create liability. File Form D within 15 days of first sale. Update filings if offering changes.

State compliance failures: Not complying with state blue sky laws. State requirements vary. Some states require notice filings. Others require qualification. Missing state compliance creates liability. Research state requirements before fundraising.

Insufficient disclosures: Missing risk factors, use of proceeds, or financial information. Insufficient disclosures create liability. Professional documentation includes required disclosures. Legal counsel helps ensure proper disclosures.

Skipping legal counsel: Trying to structure offerings without legal counsel. Securities law is complex. Improper structures create significant liability. Legal counsel essential for compliant fundraising. Don't skip legal counsel to save costs.