Investing In Startups – A Guide For Non-Accredited Investors

Investing In Startups – A Guide For Non-Accredited Investors

Startup investing is a popular way to potentially earn high returns on investment, but it can also be risky. Many startup companies fail, and investors may not see a return on their investment. However, for those who are willing to take the risk, investing in startups can be a rewarding experience.

If you are interested in investing in startups, it is important to understand the different types of investors and the rules that govern their investments. This guide is specifically for non-accredited investors or individuals who do not meet the financial requirements to be considered accredited investors.

What is a Non-Accredited Investor?

A non-accredited investor is an individual who does not meet the criteria for an accredited investor. An accredited investor is someone who:

  • Earns an annual income of $200,000 (or $300,000 with a spouse) for the past two years and expects to earn the same or higher in the current year.
  • Has a net worth of over $1 million, either individually or jointly with a spouse, not including their primary residence.
  • Non-accredited investors do not meet these criteria and therefore may have different investment options and restrictions than accredited investors.

What Is the Difference Between Accredited and Non-Accredited Investors?

Accredited investors have more investment options available to them, including the ability to invest in private placements and hedge funds, which are not available to non-accredited investors. Accredited investors also have fewer restrictions on the amount they can invest in a given year. Non-accredited investors, on the other hand, are limited to investing up to a certain amount in a given year, as determined by the SEC.

Can Non-Accredited Investors Invest in Startups?

Yes, non-accredited investors can invest in startups, but there are some restrictions and limitations. For non-accredited investors to invest in a startup, the company must either be registered or use an exemption to the registration requirements, such as Regulation Crowdfunding or Regulation A+. These exemptions allow startups to raise funds from both accredited and non-accredited investors, but they also come with specific rules and limitations on the amount that can be raised and the type of information that must be disclosed to investors.

Are Startup Investments Good Investments?

Startup investments can be risky, as most startups do not succeed. However, the potential for high returns can make them attractive to investors. It is important to thoroughly evaluate the potential risks and rewards before making a decision to invest in a startup. 

If you are planning to invest in startups, it is wise to know the pros and cons of startup investing. So, here are the benefits and drawbacks of investing in startups:


  • Potential for high returns: If the startup is successful, investors could see significant returns on their investment.
  • Opportunity to be involved in the growth of a company: Investing in a startup can give investors the opportunity to be involved in the growth of a company and potentially have a say in its direction.
  • Diversification: Investing in a startup can add diversity to an investment portfolio, as startup investments tend to be less correlated to the stock market.


  • High risk: Most startups do not succeed, and investors could lose their entire investment.
  • Limited information: Startups often have limited financial and operational information available, making it difficult to accurately evaluate the investment.
  • Limited liquidity: It can be difficult to sell startup investments, as there may not be a market for them.

The Bottom Line

Investing in startups can be a high-risk, high-reward opportunity for those who are willing to take the risk. Non-accredited investors can invest in startups through crowdfunding platforms and Regulation A+ offerings, but it is important to understand the risks and regulations associated with these investments. As with any investment, it is important to do thorough research and only invest what you can afford to lose.