Post: #1

Hi all,

I qualify to become an accredited investor but don’t really know anything about it.

Is it worth the hassle?

Any particular opportunities that it would open up doors with?

Thanks.

Post: #2

(03-02-2018 11:38 AM)jbkunt2 Wrote:  Hi all,

I qualify to become an accredited investor but don’t really know anything about it.

Is it worth the hassle?

Any particular opportunities that it would open up doors with?

Thanks.

Meeting the requirements of Accredited Investor Status gets the investor access to sponsors that are raising capital for larger investments that are typically beyond the reach of an individual investor. The capital stack for investing in larger assets such as apartment buildings, office buildings, etc. might include 25% to 35% private equity from accredited investors and the remaining from bank or agency (Fannie, Freedie) debt.

The burden is on the sponsor to vet the accredited investor status (income or net worth). The burden on the investor is to vet the sponsor.

I've looked at a few of these, but so far prefer to be more active in smaller investments that I can take down on my own. For the accredited investor, investing in a sponsor's offering is an option to invest more passively and let someone else do the heavy lifting.

You might look around on Crowd Street to get an idea of what these look like, or do some research on 506c offerings.

Post: #3

When companies issue stock that is not registered with the SEC, the easiest way to do it is by limiting the investors to accredited investors.

So you typically are dealing with non-public companies that are illiquid.

Just because you are accredited does not mean that you should put any money into companies at this level.

Most VC funds assume 8 or 9 out of 10 will go bust, so you need to limit this to a small percentage of your net worth, which means you really ought to be 5 or 10 times the accredited investor standard for it to make sense to be investing in these.