What is an accredited investor? Well, according to the SEC, and accredited investor has to be a bank, private business development company, a 501(c)(3) with more than 5 million in assets, a trust, an entity where all the equity owners are accredited investors, or individuals who meet the following requirements:
Net worth exceeding $1 million
A person with an annual income of $200,000 or more, or $300,000 or more with their spouse, for the past two years
When determining who is an accredited investor, it is also important to be aware of important exceptions. For example, an individual with a net worth of $1 million or more cannot count towards their net worth the value of their primary residence. They can count rental properties, vacation homes or joint ownership interest in other real estate. However, a home they actually live in full time cannot be counted towards their net worth.
Directors, partners and executive officers can also be considered accredited investors
Many people do not realize that the directors, partners and executive officers of an entity that is raising capital can be counted as accredited investors, even if they do not meet the net worth or income requirements to do so. This only applies when they are making the investment into the company they are involved in. This exception was carved out because it is generally thought that if you are involved in a company at that level, you would understand the ins and outs of the business and the rest that are involved with investing in the company.
Why should you care about who is an accredited investor as a salesperson?
Put simply, it is illegal to offer a private placement investment opportunity to anyone who is not accredited investor. If you are promoting a rake the offering and show the material to someone who is not accredited, you could be subject to fines and put the deal in jeopardy. This is not a risk worth taking so it is critical that salespeople first determine if the people they are contacting need to be accredited, as is always the case with a Reg D offering. If the answer is yes – they need to be accredited, it is important to purchase a sales leads list that only contains accredited investors. We can provide one at www.SalesLeads.tv and have been doing so for 29 years.
If you are unsure if you should be reaching out to accredited investors or if your offering can be presented to anyone, contact us. We can provide you with more information and direct you to additional resources. We can also help to create a strategy for the best types of leads to target and then provide you with an accurate list. Get the best sales leads by calling John Fischer at 561-981-8777 or email Bear@SalesLeads.tv