Previously, the Securities Exchange Commission (SEC) required Angel Investors to meet their definition of an accredited investor. The general rule was that an Angel had to have a net worth of at least $1 million and make $200,000 a year.
The concept that the SEC released states that an accredited investor is someone who has the “financial sophistication and [the] ability to sustain the risk of loss of investment.”
They went on further to add that an accredited investor can be one of the following (among other various requirements):
- A bank, registered broker-dealer, an insurance company, a registered investment company, or a business development company.
- A private business development company.
- A tax-exempt charitable organization, corporation, or partnership with assets in excess of $5 million.
On top of these new changes, there have also been changes to equity crowdfunding rules through the JOBS Act. Because crowdfunding has become so popular, it means that small startups no longer have to rely on accredited investors to receive funding.
Now, companies can accept up to $1 million in funding through equity crowdfunding. To protect investors, individuals can only invest up to 10% of their annual income or net worth. There isn’t a minimum amount required in order to invest this way.
What do all of these changes mean? Practically anybody who has the wealth to make investments and wants to reap the benefits can technically become an Angel Investor.
Are you ready to make your first angel investment? Learn more by contacting us at info@OmegaAccelerator.com
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