What is an accredited investor? (And how CaN YOU tell if you are one?)

 

If you aren't sure what it means to be an accredited investor — or if you just want to understand more about why we're asking — please read the information below. As always, feel free to reach out to team@legionm.com if you have any additional questions.

What is an accredited investor?

An “Accredited Investor” is simply an SEC classification. To qualify, you must meet ONE of the criteria listed below:

☐ Income threshold

  • Individual: $200,000+ per year for the last two years (with same expectation this year)

  • Joint with spouse/partner: $300,000+ per year for the last two years (with same expectation this year)

☐ Net worth threshold (see below for how to calculate this)

  • $1 million+ in assets, not counting your primary home

  • You can combine with a spouse or partner

☐ Professional license

  • Series 7 (General Securities Representative)

  • Series 65 (Investment Adviser Representative)

  • Series 82 (Private Securities Offerings Representative)

☐ Company insider

  • You're a director, executive officer, or general partner of the company issuing the securities

There are other criteria (including those for entities like partnerships, LLC's and trusts). For more information, please check out the SEC's website.

  • Your “net worth” is simply the total value of everything you own minus everything you owe. I.e: if you sold all your assets and paid off all your debts today, what would be left over?

    Here's how to calculate it:

    Add up you assets:

    • Retirement accounts (401k, IRA, pension)

    • Investment and brokerage accounts

    • Real estate you own (not your primary residence)

    • Business ownership stakes

    • Vehicles, collectibles, and other valuables

    • Cash and savings

    Subtract your liabilities:

    • Investment property mortgages

    • Car loans

    • Student loans

    • Credit card debt

    • Other liabilities

    Don't include:

    • Your primary home's value

    • The mortgage on your primary home (with some exceptions)

    If the result is over $1 million, you meet the net worth criteria, and are considered by the SEC to be an accredited investor .

What if I’m not accredited?

If you don't qualify as an accredited investor, don’t sweat it. You in the majority — only about 13% of Americans do.

This used to be a problem — before Legion M, there wasn’t a way for non-accredited investors to invest in things like movies, film funds, or pre-IPO entertainment companies.

But equity crowdfunding has changed the game, and today companies like Legion M allow ALL investors — accredited or not — to invest like the 1%.

What if I am accredited?

As an accredited investor, you have access to offerings made under Regulation D (which only allows accredited investors) IN ADDITION TO any offerings made under equity crowdfunding (e.g. Regulation CF and Regulation A+).

Whenever possible, Legion M utilizes Reg CF and Reg A+ to enable ALL investors to participate. However, in some cases we are limited to using Reg D (e.g. if we’ve already hit our equity crowdfunding cap for the year), and in others we open concurrent Reg D offerings so we can can preserve our CF cap space for non-accredited offerings.

In addition, Reg D offerings typically cost less than Reg CF or Reg A offerings — there are fewer legal and platform fees. When possible, we pass along those savings to investors.

 
Legion M Team