Accredited investor

An accredited investor is someone who meets certain income, net worth, or professional criteria that regulators use to determine they can handle the greater risk and reduced disclosure that come with certain private investments, such as hedge funds, venture capital, and private equity.

The rules exist because these investments are less regulated and less transparent than public markets, so access is restricted to investors considered financially sophisticated or well-resourced enough to bear the risk of a loss, or to properly evaluate the opportunity in the first place.