What Is an Accredited Investor and How to Become One in 2025
In this piece you will learn what it means to be an Accredited Investor, how to become one, and what the perks are.
Just once you qualify as an accredited investor, you’ll get to benefit from so-called ‘exclusive’ investment opportunities: Venture capital, private equity, real estate syndications, and hedge funds. These are paid only for higher-end jobs and exclusively aren’t offered to every person. To be an accredited investor means you are in another league in this wealth-creating league.
Let us take the case that you want to grow your investment portfolio in the year 2025. In that case, the very first thing you need to know is how to gain an accredited investor status.
What Exactly Does It Mean to Be an Accredited Investor?
Guided by the Securities and Exchange Commission (SEC) guidelines, an accredited investor is one who has amassed a particular income level, net worth, or professional status that qualifies them to invest their money in an unregistered private offering (i.e. one with a high risk profile).
This category is for people involved in complex or high-risk business deals to keep the people with sufficient financial experience, knowledge, and strength to avoid losses in case of any.
Why It Matters in 2025
Public growth is lesser than private. In 2025, investors are turning to:
- Pre-IPO startup equity
- Real estate syndicates
There is also another classification – the type of funds: funds that are privately held, that is to say they are not intended to be listed on the market (hedge funds [HF], private equity [PE], venture capital [VC], etc.).
Crowdfunded platforms are known for their exclusive deal flow being raised on the platform. But it’s only an option for accredited investors, which typically means the returns are high, too.
Who Qualifies as an Accredited Investor?
Only an individual or entity could qualify as an accredited investor if it fulfills one of the following:
Income Test
- You’ve earned more than $200,000 USD as an individual or $300,000 joint with spouse in each of the past 2 years.
- It’s very reasonable to expect the same dollars of income for the current year.
Net Worth Test
- If you don’t count the value of your primary residence, you at least have $1 million of net worth.
- Examples are retirement accounts, investment properties and business equity.
Professional Credentials
- Your securities Series 7, 65, or 82 are active.
- Financial professionals (RIAs, CPAs, etc.) have been added to the rules to qualify.
Entity-Based Qualification
- The amount of your assets, inclusive of your trust, company or partnership’s share, exceeds $5 million.
- Moreover, certain LLCs or funds restricted to certain ownership structures will also be qualified.
Canadian Accredited Investor Rules
The bar is similar in Canada, but that too is regulated at the provincial securities commissions. For example, in Ontario:
- Income: $200,000 (individual) or $300,000 (combined) annually
- Financial assets: $1 million or more
- Net assets: $5 million or more
How to Verify Accredited Investor Status
Platforms and investment funds are required to be verified. You’ll typically need to provide:
- Tax returns (for income verification)
- Net worth certified by letter of CPA or lawyer
- Brokerage or financial statements
- Proof of professional license if qualification is through credentials
In the case of, e.g., AngelList or Yieldstreet, they use 3rd party verifiers like VerifyInvestor. These go a long way in preventing fraud.
Accredited vs Non-Accredited: What’s the Real Difference?
| Feature | Accredited Investor | Non-Accredited Investor |
|---|---|---|
| Private Deals | ✅ Yes | ❌ No |
| SEC Oversight | ⚠️ Limited | ✅ Full |
| Risk Tolerance Expected | High | Low |
That’s why investing doors open to the public have large minimum investment thresholds—often $25k+, though sometimes as low as $100 on public apps—and high barriers to entry.
Benefits of Becoming Accredited
- Exclusive Access: Early-stage startups, syndications and private funds
- Potential for Higher Returns: Risk-adjusted alpha over traditional markets
- Diversification: Alternatives beyond stocks and bonds
- Passive Structures: No hassle; money invested in managed deals
Drawbacks to Know
- Higher Risk: Less regulatory protection
- Less Liquidity: Long lock-up periods are common
- Higher Minimums: Many deals require $10,000–$100,000+ commitments
- No Guarantees: Accreditation does not ensure profits
FAQs
Is accredited investor status permanent?
No. At least every 12 months, you have to reverify your income or your net worth.
How does anyone become an accredited investor?
You do not need to file with the SEC if you meet the financial or professional standards. Verification happens on investment platforms.
How fast can one verify status?
Most platforms complete their verification process within 1–3 business days if your documents are ready.
Should I register myself with the government?
No. You don’t register with the SEC. You self-certify on platforms and private investment providers.
What happens if I falsely claim accredited investor status?
You may face legal liability and could be banned from any future offerings.
