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Do foreign investors need to be accredited investors?

For a question like this, it is really important that you seek legal advice for your specific situation. For U.S. securities regulations to apply, it does not really matter where the startup operates; what matters is the fact that the company is incorporated in the U.S. Second, whether you need to be accredited depends on the type of investors the startup is seeking. Generally, a company will pursue accredited investors if they are looking to be acquired down the road. If the company is not seeking large investments, it may raise funds from non-accredited investors such as friends and family.

In the United States, the Securities and Exchange Commission (SEC) regulates how and when an investor may be accredited in regard to a U.S. corporation. Under SEC regulations, an accredited Investor is an individual who has (i) a net worth (or joint net worth with his/her spouse) that exceeds $1 million at the time of the purchase (not including the value of the primary residence); or (ii) income exceeding $200,000 in each of the two most recent years (or joint income with a spouse exceeding $300,000 for those years) and a reasonable expectation of such income level in the current year. Thus, to be an accredited investor, you must carefully review your net worth.

My company LawTrades is a one-stop platform where you can find experienced, pre-vetted attorneys to help you with all the complex legal issues concerning your investment in U.S. startups. We’ll give you a free consultation and a no-obligation price quote. Good luck w/ everything!

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