accredited investor – n : This is a legal distinction of a type of investor who is eligible to buy equity, mezzanine, or debt securities in companies that are marketed privately (private placement), are not registered with the SEC, and do not trade on a public market such as the NASDAQ or NYSE. Accredited investors must be knowledgeable and sophisticated individuals or institutions and must meet required minimum levels for assets under management or net worth, which are different for individuals and institutions. The current standard states that for an individual to qualify as an accredited investor, she/he must have a net worth of at least $1.0 million and/or an average income of $200,000 over the past three years. Consult an attorney prior to and during the fundraising process to ensure that your company conforms to SEC regulations.

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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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