In the United States, certain investments—like venture capital and hedge funds—have historically been restricted to “accredited investors,” a designation based on financial criteria. 

As investing becomes more democratized through fintech and alternative fund structures, the conversations around who is and who can qualify as an accredited investor are evolving. Innovations like The Cashmere Fund are also making it possible for non-accredited investors to access assets like venture capital without such stringent requirements for wealth and net income. 

What Is an Accredited Investor?

An accredited investor is an individual or entity that meets specific financial qualifications, allowing them access to exclusive investment opportunities. The Securities and Exchange Commission sets these parameters to ensure that investors participating in high-risk ventures have the financial sophistication and stability to do so.

As of Feb. 2025, accredited investor criteria include:

• An individual earning at least $200,000 per year for two consecutive years (or $300,000 for joint income with a spouse/partner).
• An individual or entity with a net worth of at least $1 million, excluding the value of their primary residence.
• A Qualified Investor—typically a fund or family office—is also counted as an ‘accredited investor.’ The fund or office must have at least $5 million in investable assets.

Accredited investors can access a range of investments unavailable to the general public, including:

• Venture capital funds – Early-stage investments in startups with high growth potential.
• Private equity – Direct investments in private companies.
• Hedge funds – Complex investment strategies with high potential returns.
• Certain real estate and private placements – Alternative assets with unique return profiles. 

These investment opportunities can come with greater risk, but they also offer the potential for higher returns, making them attractive to those who qualify.

The History of Accredited Investor Rules

Accredited investor laws were introduced in 1933 with the Securities Act, designed to protect retail investors from high-risk investments. At the time, financial literacy was lower, and access to investment information was limited. The assumption was that wealthier individuals and entities had the resources and expertise to evaluate riskier investments.

However, the investment landscape has evolved significantly. Today, fintech platforms, wealth management tools, and investor education resources have democratized access to financial markets, raising questions about the fairness of these restrictions. In response, the SEC has made amendments to the accredited investor definition.

How the Accredited Investor Definition Is Changing

In recent years, the SEC expanded the definition of accredited investors to include individuals with certain professional certifications—such as financial industry professionals—regardless of net worth or income. This marks a shift from purely wealth-based qualifications to knowledge-based criteria.

Despite these changes, some argue that the accredited investor rules still unfairly limit investment opportunities. According to the Cato Institute, the current rules assume wealth equates to sophistication, restricting financially responsible but less wealthy investors from high-return opportunities. 

Why This Matters: A Changing Investor Landscape

The push to redefine accredited investor rules is driven by the changing behavior of investors. According to CNBC, while the average American starts investing around 30 years old, younger generations—particularly Gen Z—are investing much earlier, with an average age closer to 19. This shift is largely due to fintech platforms lowering investment barriers and increasing accessibility to financial education. 

This trend underscores why expanding accredited investor criteria is an important issue. As younger investors gain access to wealth-building tools, ensuring fair access to investment opportunities will be a growing point of discussion.

The Cashmere Fund: Expanding Investment Access

One investment option that accommodates both accredited and non-accredited investors is The Cashmere Fund. Unlike traditional private equity or venture capital funds, which typically require accredited status, Cashmere is structured as an interval fund—a type of SEC-registered investment vehicle. This structure allows anyone to invest, regardless of accredited investor status. This is possible for a few reasons:

• The fund operates under SEC rules without relying on exemptions like Regulation D or A.
  
  • Regulation D allows companies to raise capital through private offerings without registering with the SEC, typically targeting accredited investors.
  • Regulation A permits companies to raise funds from the public with less stringent requirements than a full SEC registration, often used for smaller offerings.
• Investors can redeem shares biannually, offering more liquidity than traditional private equity or VC funds.
• The fund is designed for long-term investment but avoids rigid 10+ year lock-up periods common in venture capital. 

By structuring itself in this way, The Cashmere Fund is breaking down barriers that have long made potentially high-return investments accessible only to the wealthiest investors.

Key Takeaways

• Accredited investor rules were created to protect retail investors but have evolved to reflect modern financial sophistication and access to news, information, and tools that have helped level the playing field for all investors.
• Recent SEC amendments now include professional certifications as a qualification, broadening access beyond wealth-based criteria.
• Fintech and digital platforms are driving early investor participation, leading to calls for more inclusive investment opportunities.
• The Cashmere Fund provides a model for investment accessibility, allowing both accredited and non-accredited investors to participate in private markets.

The Future of Accredited Investing

As technology and investor knowledge continue to grow, the SEC faces increased pressure to expand investment accessibility. While accredited investor status still plays a role in protecting individuals from undue financial risk, modern tools and platforms are reshaping the landscape—allowing more people to participate in high-growth investment opportunities. Reflecting this shift, in September 2024, Senator Tim Scott introduced the Empowering Main Street in America Act, proposing that individuals could qualify as accredited investors by passing a financial sophistication exam, thereby broadening access to investment opportunities.

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