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Sophisticated Investor

Investment management is a complex business combining financial and strategic analysis, geopolitical and economic sophistication, business experience and empathy with business managers and owners. It is only suitable for individuals competent to understand the terms and having had the experience of responsibility for significant assets.

An investor who has sufficient knowledge and experience with investing that he/she is able to evaluate the merits of an investment. A requirement of certain exempt offerings.

The following definitions are based on US securities law. Other jurisdictions may have other requirements. You should be able to satisfy minimum requirements.

Sophisticated Investor

Investors that meet the standards for participation in a non-public offering under Section 4(2) of the Securities Act of 1933, as amended, ("Act"), under Section 25102(f) of the California Corporate Securities Law of 1968, as amended, ("California Act"), and under the laws of other states.

These investors do not have to have the net worth or income of an Accredited Investor, but may invest in the same type offerings by qualifying under the "sophisticated investor" status.

* The investor should be able to hold his investment for an indefinite period of time and have sufficient net worth to sustain a loss of his entire investment in the event such loss should occur.

* The investor must have, either alone or with his purchaser representative, such knowledge and experience in financial and business matters that he/they is/are capable of evaluating the merits and risks of any investment contemplated.

* The investor represents that he has made other investments of a similar nature to any contemplated now or in the future and, by reason of this business and financial experience and of the business and financial experience of those persons he has retained to advise him with respect to any investments contemplated now or in the future, has acquired the capacity to protect his own interest. He will carefully evaluate his financial resources and investment position and the risks associated with any investment and acknowledge that he is (will be at the time of investment) able to bear the economic risks of any contemplated investment now or in the future.

* The investor represents that any contemplated investment will not exceed 20% of his net worth at the time of purchase (including home, furnishings, and automobiles).

Accredited Investor

The SEC designation for an individual or entity meeting any of the criteria listed below. Certain restricted offerings, limited partnerships, and angel investor networks are open only to accredited investors. opposite of nonaccredited investor.

SEC criteria for accredited investor:

Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer or general partner of a general partner of that issuer.

Any natural person whose individual net worth, or joint net worth with that personís spouse, at the time of his purchase exceeds $1,000,000.

Any natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with that personís spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase of the securities is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

Any organization that was not formed for the purpose of acquiring the securities being sold, with total assets in excess of $5,000,000.

And, any entity in which all of the equity owners are Accredited Investors.


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