Institutional investors are professional investors who pool together capital and invest on behalf of others, typically at much higher volumes than retail investors. These professional investors include pension funds, mutual funds, hedge funds, banks, insurance companies, endowment funds and other large investors.

An accredited investor has to meet certain income or net worth requirements and professional criteria to invest in certain investments established by Rule 501 of Regulation D of the SEC’s accredited investor test, specifically:

• Have a net worth, excluding any primary residence, of at least $1 million

• Have earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years and reasonably expect the same for the current year

• Hold a Series 7, 65 or 82 license

Accredited investors are considered financially sophisticated enough to manage their own investing activities—or have enough wealth to withstand significant losses—without needing the SEC’s protections. Accredited investors can participate in certain securities offerings that non-accredited investors cannot.

A qualified purchaser is an individual or entity that meets the criteria of investment owned under section 2(a)(51) of the Investment Company Act. To be a qualified purchaser, one of the following criteria must be met:

• An individual holds at least $5 million in investments

• A family-owned business owns at least $5 million as an investment

• A $5 million or more trust is managed by the qualified purchasers

• An entity that invests at least $25 million

• An entity where all the members are qualified purchasers

Accredited investors are considered financially sophisticated enough to manage their own investing activities—or have enough wealth to withstand significant losses—without needing the SEC’s protections. Accredited investors can participate in certain securities offerings that non-accredited investors cannot.

A non-accredited investor is an investor that does not meet the income or net worth requirements established by Rule 501 of Regulation D of the SEC’s accredited investor test. A non-accredited investor, which is also referred to as a retail investor, has a net worth of less than $1 million and their individual income is less than $200,000 per year or $300,000 if married. Non-accredited investors have greater protection by the SEC from higher-risk investments.