SEC Definitions of Accredited and Sophisticated Investors

Accredited Investors: They must have a net worth of $1 million, excluding the value of their primary residence, or they must meet certain annual income benchmarks. Individuals who have made more than $200,000 per year for two years, and with an expectation of continuing to do so qualify as accredited investors. Married persons can be considered accredited if their combined income is at least $300,000 per year.


Sophisticated Investors: They must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.