Accredited Investors, Qualified Purchasers, Qualified Investors, Experienced Investors and all that angel investment jazz.

I think Angels can be very important to the success of Pre-Seed to A Series startups. To early founders I often describe the difference between Angels and VCs. VCs have the fiduciary responsibility to manage capital as financial managers, and they will invest mostly with their financial ratio. Angels invest with their hearts, and often senior skill from the market in case.

At TenNine VC, we are working hard to connect planet positive innovation to a wide as possible range of engaged and capable angel investors, who want to involve their available capital and skill in the fascinating world of venture.

As always, there are some rules however.

Legislation around angel investing.

Domicile jurisdictions of participants in private financial markets, including angel investing in startups, may require that some types of financial offerings can only be made to accredited investors, under valid local criteria.??

In order to angel invest at present, individuals must either self-assess (US, UK, EU, Canada) or officially certify (India).?

Definition of an accredited investor varies per jurisdiction of individual's financial domicile. We have summarised the criteria for being considered Accredited Investors (USA, EU, Canada, India), Qualified Purchasers (USA), High Net Worth or Sophisticated Investor (UK), Qualified Investors (UAE) and/or Experienced Investors (EU), per country of investors’ financial domicile.

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Please note. Here presented information should by no means be used as exhaustive. Angel investors are required to do their own research, and truthfully express their conformance to criteria in their financial jurisdiction. We have listed accredited investor criteria to us available at the time of publishing.

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USA.

An Accredited Investor is an individual who meets at least one of these criteria:

• Has a net worth of $1M+, not including their primary residence.
• Has an income that exceeds $200K per year for prior 2 years, or a joint income with their spouse of $300K per year for prior 2 years.
• Has a Series 7, Series 65, or Series 82 license and is active and in good standing.

A Qualified Purchaser is an individual or entity with $5M+ of net assets.

For additional details on the qualifications for being an accredited investor or qualified purchaser if you are a US citizen, please go here .

EU.

Accredited Investors (a.k.a. Experienced Investors) are individuals as defined under Markets in Financial Instruments Directive (MiFID, Annex II), and must satisfy at least two of the following quantitative criteria:

• Individual has carried out trade transactions, in significant size (at least €50,000), on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
• Size of individual's financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds €500,000;
• Individual works or has worked in the financial sector for at least one year in a professional position which requires knowledge of the transactions or services envisaged.

For additional details on the qualifications for being an accredited investor or qualified purchaser if you are an EU citizen, please go here .

UK.

Individual investors should ensure that they are self-certified as either a High Net Worth Individual or Sophisticated Investor, as defined by the FCA under the Financial Services and Markets Act 2000 (FSMA).?

A High Net Worth individual is considered as such if they:

• have an annual income in excess of ￡100K, or
• have net assets in excess of ￡250K beyond their pension fund assets and their private residence.

A Sophisticated Investor is considered as such if they:

• have been a director of a company turning over at least ￡1 million within the last two years, or
• have made more than one investment in an unlisted company in the last two years, or
• have been a member of a network or syndicate of business angels for at least six months, or
• have worked in the past two years in a professional capacity in the private equity sector or in the provision of finance for small and medium enterprises.

For additional information if you are a UK Angel, please go here .

Canada.

Legislation in Canada is similar to US and reads in main lines (please visit the link below for complete information):

An "Accredited Investor" (as defined in NI 45 106) is (either of):

1. an individual with assets with a realizable value net of any related liabilities and taxes, in excess of $1,000,000, either alone or with a spouse,
2. an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years, or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who reasonably expects to exceed that net income level in the current calendar year,
3. a person, other than an individual or investment fund, that has net assets of at least $5,000,000,
4. a person registered under the securities legislation of a jurisdiction of Canada, as an adviser or dealer,
5. a Trust or an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser.?

For details on the qualifications for being an Accredited Investor if you are a Canadian citizen, please go here .

UAE.

The United Arab Emirates (UAE) Securities and Commodities Authority (SCA) has issued a decision (No. 37 (R.M) of 2019), effective December 1, 2019, and defines a Qualified Investor as:

1. The natural person who meets the following conditions:
2. His net equity, with the exception of his main house, is valued at AED (4) million.
3. His annual income is not less than AED (1) million annually.
4. Declaring that he has the adequate knowledge and experience in the field of investment and its risks, or represented by an entity licensed by the Authority without prejudice to the terms of its licensing.”
5. The natural person accredited by the Authority or by a Similar Regulator to perform any of the functions related to financial activities or services.
6. The corporate person that meets any of the following conditions:
7. The Federal Government, local government and governmental entities, institutions and authorities, or companies wholly owned by any of the aforementioned
8. Foreign governments, and their entities, institutions and authorities or companies wholly owned by any of them
9. International authorities and organizations
10. Entities licensed by the Authority or by a Similar Regulator
11. A corporate person that meets, at the date of its last financial statements, at least two of the following requirements:

• Its total budget of AED (75) million
• Has net annual return of AED (150) million
• Has funds or paid up capital of AED (7) million.

For details on the qualifications for being a Qualified Investor if you are a UAE citizen, please go here .

India.

Securities and Exchange Board of India (SEBI) has introduced the concept of Accredited Investors (AI) in the Indian securities market. Accredited Investors are defined as:

1. Individuals, HUFs, sole proprietors, and family trusts with:

• Annual income of Rs 2 crore ($ 272,000 approx.) or more, OR
• Net worth of Rs. 7.5 crore ($ 1.02 million approx.) or more, of which at least 50% has to be in financial assets, OR
• Annual income of Rs 1 crore ($ 136,000 approx.) or more + net worth of Rs 5 crore ($ 680,000 approx.) or more, of which at least Rs 2.5 crore ($ 340,000 approx.) has to be in financial assets.

1. Partnership firms, where each of the partners meets one of the criteria mentioned in i. above.
2. Trusts (other than family trusts) with a net worth (as per statutory audit) greater than or equal to Rs. 50 crore ($ 6.8 million. approx.).
3. Body corporates with a net worth (as per statutory audit) greater than or equal to Rs. 50 crore ($ 6.8 million. approx.).

For details on the qualifications for being an Accredited investor if you are an Indian citizen, please go here and here .

Commentary: only 1%?

US, EU, UK, Canada and India consider investors accredited when they either:

• Earn $200k-$300k or more per year, or
• Have a net worth of $1M or more.

This means that only one or so percent of the global population is allowed to personally invest in startups, according to some sources .

Here’s a thought.

In the recent abundance of mass retail investing in exchange traded stocks and financial derivatives which is open to anyone, regulated, commission free, high frequency and seamless, we sense a certain discord.?

Especially on issues like climate action, energy, water, food, or AI, we feel that many more should and must be able to choose to support startups instead of corporate stocks, or Dodge coins or NFT’s, if they wanted to.

Put concretely, the legislation which limits angel investing to only a few percent of rich individuals and finance experts seems due update to us.?

However, let’s hold on to the maxim that we should work on what we can influence, and with what we can't.?

So, those of us who can: let’s give attention to startups.

It is a wonderful world, in which we can do so much.

Midjourney prompt for the banner.

/imagine “A zoom on the side of the astronaut’s helmet which is filling most of the image, in whose reflection we see three legal books, and a globe, which represents earth visibly damaged by climate change. Black and white.”

We love how AI here got the gist and visualised our thought, even though it changed our scene and got some details wrong.

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