Non-Accredited Investor

AAA

DEFINITION of 'Non-Accredited Investor'

An investor who does not meet the net worth requirements for an accredited investor under the Securities & Exchange Commission's Regulation D. A non-accredited individual investor is one who has a net worth of less than $1 million (including spouse) and who earned less than $200,000 annually ($300,000 with spouse) in the last two years.

INVESTOPEDIA EXPLAINS 'Non-Accredited Investor'

When a company raises private equity for an investment, such as a new company or a hedge fund, it is able to receive unlimited investments from accredited investors. On the other hand, Regulation D stipulates only 35 non-accredited investors are allowed to invest money into a private placement.

RELATED TERMS
  1. Hedge Fund

    An aggressively managed portfolio of investments that uses leveraged, ...
  2. Private Equity

    Equity capital that is not quoted on a public exchange. Private ...
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a ...
  4. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  5. Accredited Investor

    A term used by the Securities and Exchange Commission (SEC) under ...
  6. Equity

    1. A stock or any other security representing an ownership interest. ...
RELATED FAQS
  1. What is the difference between a summary prospectus and an offering memorandum?

    All securities offered to investors in the United States are required to comply with the anti-fraud provisions of federal ... Read Full Answer >>
  2. What are the major differences between investment banking and private equity?

    Private equity and investment banking both raise capital for investing purposes but tend to do so in very different ways. ... Read Full Answer >>
  3. What are some advantage of raising capital through private placement?

    Small businesses face the constant challenge of raising affordable capital to fund business operations. Equity financing ... Read Full Answer >>
  4. How are leveraged buyouts financed?

    A leveraged buyout (LBO) is a transaction in which the buyer borrows a significant portion of the requisite funds to purchase ... Read Full Answer >>
  5. What are the different equity financing options available to companies in the United ...

    Finding and attaining affordable financing is an ongoing challenge for most businesses within the United States. Debt financing ... Read Full Answer >>
  6. How do returns on private equity investments compare to returns on other types of ...

    For high-net-worth individuals and institutional investors, private equity is an attractive investment option because of ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Hedge Funds: Higher Returns Or Just High Fees?

    Discover the advantages and pitfalls of hedge funds and the questions to ask when choosing one.
  2. Options & Futures

    Hedge Funds Hunt For Upside, Regardless Of The Market

    Hedge funds seek positive absolute returns, and engage in aggressive strategies to make this happen.
  3. Investing Basics

    Policing The Securities Market: An Overview Of The SEC

    Find out how this regulatory body protects the rights of investors.
  4. Brokers

    Private Equity's Returns Are Tempered By Its Risks

    Private equity firms adopt approaches to quickly hike up earnings and boost returns, but these investments come with big risks too.
  5. Entrepreneurship

    The Risk And Rewards Of Investing In Startups

    Investing in startups is a very risky business but can reward investors greatly if and when they do pay off.
  6. Investing

    Top Alternative Investments To The Stock Market

    Dislike the stock market or want greater diversity? Here are some alternatives.
  7. Fundamental Analysis

    Private vs Public Equity: What's Best?

    What is the better way for a company to attract investors; by making its stock available for sale to whoever wants some, or by petitioning rich people?
  8. Charts & Patterns

    How To Become A Private Equity Associate

    With the right planning, second- and third-year investment banking analysts can graduate to an associate position at a private equity firm.
  9. Professionals

    Coming Soon: Private Equity In 401(k) Plans

    The day will soon come when private equity is commonly found among 401(k) plan investment options. Here's who's leading the charge and what to watch for.
  10. Entrepreneurship

    How Venture Capitalists Make Investment Choices

    In order to increase your odds for receiving funding, here are some criteria considered by venture capitalists.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center