Investor Eligibility — Accredited Investors and Qualified Purchasers

To invest in the pre-IPO companies available on Mirai Capital, you must understand the regulatory distinctions between “accredited investor” and “qualified purchaser.” These designations are established by the U.S. Securities and Exchange Commission (SEC), and ensure that those making certain investments, especially in private capital markets, can understand and handle their potential risks.

Why the Designations Exist

The SEC created the categories of accredited investor and qualified purchaser to limit participation in private markets to individuals and institutions who are financially sophisticated and able to handle higher levels of risk. Unlike publicly traded stocks, private company shares are typically:

  • Illiquid: They can be difficult to sell quickly, meaning your money might be tied up for years.
  • Less transparent: Private companies don’t have the same public reporting requirements.
  • Higher risk: Early-stage companies have a higher failure rate than established public companies.

What Is an Accredited Investor?

For an individual to be considered accredited, you must meet one of the following standards:

  • Income test: Earn an individual annual income of over $200,000 USD (or $300,000 USD when combined with a spouse or spousal equivalent) in each of the two most recent years, with a reasonable expectation of reaching the same income level in the current year.
  • Net worth test: Possess a net worth exceeding $1 million USD, either individually or jointly with a spouse or spousal equivalent, excluding the value of your primary residence.
  • Professional certifications: Hold in good standing certain professional certifications, designations, or credentials recognized by the SEC.
  • Knowledgeable employees: A “knowledgeable employee” of a fund can count as an accredited investor in that particular fund.

For an institution to qualify as an accredited investor, it must fall into a specific category and have a certain amount of assets under management.

What Is a Qualified Purchaser?

Every qualified purchaser is also an accredited investor, but not every accredited investor is a qualified purchaser. The difference lies in the higher investment thresholds required to reach qualified purchaser status.

To be considered a qualified purchaser, you must generally meet one of the following requirements:

  • Individuals and married couples: Individuals or married couples must have $5 million or more in investments or joint investments, excluding their primary residence or business property.
  • Family offices: A family office can count if it has at least $5 million in investments, and was not formed for the purpose of acquiring the securities offered.
  • Investment managers: An investment manager qualifies if they manage at least $25 million in investments on behalf of qualified purchasers.
  • Trusts: A trust in which the trustee and all settlors are qualified purchasers fulfils the requirements.

Verifying Your Status

When you create an account on Mirai Capital, you’ll be asked about your immediate net worth, your approximate gross household income, and whether you own more than $5 million in investments. For some investments, you’ll be able to rely just on the statements you make during this signup process. Other investments will require Mirai Capital to verify your status with documents such as paystubs, W2s, statements of net worth, or a letter from your advisor or CPA.