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Accredited Investor

An accredited investor is a person or group with enough wealth to be able to make certain types of investment.

The term accredited investor actually refers to two different groups.

The first is any individual or institutional investor who has a net worth of over $1,000,000, excluding the value of their primary residence (i.e., the investor has at least $1,000,000 in investable assets).

The second group is any individual or institutional investor who meets one of the following qualifications:

- An individual that has had income in excess of $200,000 per year in each of the prior two years, and reasonably expects the same for the current year;

- Or a spousal couple that has had income in excess of $300,000 per year in each of the prior two years, and reasonably expects the same for the current year;

- Or an individual or spousal couple with over $1,000,000 in net worth (excluding the value of their primary residence);

- Or a charitable organisation, corporation, partnership or trust with assets in excess of $5,000,000.

For an updated definition of accredited investor see the SEC.

Please note that some states have their own regulations around "accredited" investors. It is advisable to check with your state regulator to verify if there are any additional requirements.

Other Terms

Investment Memo

An investment memo (also known as a deal memo or deal memorandum)is a crisp and clear way to layout and pitch your company to potential investors. Memos are a clear and concise document to lay out strategic vision, rationale, and expectations for an investment, project, product or strategy.

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Venture Capital

A venture capital firm is usually a private partnership that are funded by wealthy individuals and organisations. Larger investment banks, pension funds, and even university endowments also invest in VC firms. In some cases, companies themselves provide capital to VC firms.

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Angel Investor

An angel investor is considered to be high-net-worth individuals who invests their own money (i.e., funds from their personal savings or from capital that they have earned from the sale of other business interests) in startups and small, growing firms.

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Investment Allocation

The investment allocation is the portion of the total round that is set aside for a specific investor. This is usually communicated in dollars but can be expressed as a percentage of the total round. For example, 100,000 or 14% of the round.

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Startup Accelerator

A startup accelerator program provides startups with financial investment, education, mentorship and networking that can help transform their early-stage companies into a successful business venture.

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Accredited Investor

An accredited investor is a person or group with enough wealth to be able to make certain types of investment.

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Venture Partner

A person, usually loosely associated with a venture capital firm, who helps the firm source new deals, find new limited partners, evaluate incoming startups, or help startups in the portfolio.

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Scout

In startups and venture capital, a scout is a person who helps investors source new deals.

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