Accredited investor

A legal status, defined by each country's securities regulator, required to invest in many private deals and funds.

Example

Most countries set the bar using income, net worth or professional-knowledge thresholds, and the exact figures vary by country and change over time.

Important

Never assume you do or do not qualify without checking your own country's current rule directly - this is jurisdiction-specific and it changes.

Related terms

• Private markets — Markets for ownership stakes that are not listed on a public exchange - startups, private companies, and many funds.
• Liquidity — How quickly and cheaply an asset can be converted to cash without moving its own price.

Lessons that explain it

• A syndicate lets you back one deal alongside a lead, and charges carry on that one deal — Syndicates pool individual investors into a single-purpose vehicle to invest in one company alongside a lead investor. They lower minimums and provide access, while charging carry and fees on each deal. (12 min)
• Access and diversification, bought with a second layer of fees — Funds of funds and investment platforms give individuals access to managers and diversification they could not reach directly, in exchange for fees charged on top of the underlying funds' own fees. (11 min)
• Public versus private markets — One prices your asset every second the market is open. The other might not price it again for years - and that silence is not the same as stability. (11 min)
• Buying a whole company, mostly with somebody else's money — A private equity fund buys control of established companies, usually financing much of the price with debt the company itself must repay. (9 min)
• A SAFE is a promise of a share, not a share — Most angel checks do not buy stock on the day they are written. They buy a contractual right to receive stock later, at a price a formula computes - and almost nobody reads the formula closely enough to know what it will say. (10 min)
• You are not buying startups. You are signing a ten-year promise to a manager. — An LP commitment in a venture fund is a legal obligation to hand over money when asked, for about a decade, to someone who decides everything about how it is used. (10 min)

All 578 terms in the Investing glossary