Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

The honest answer most guides avoid: you can't become traditional angel investor in US without meeting accredited investor requirements. The regulations are real, enforced, and have limited exceptions.

But there are paths forward worth understanding.

The Regulatory Reality

US Securities and Exchange Commission requires accredited investor status for most private securities investments. Requirements: $200,000 annual income ($300,000 jointly) for past two years with reasonable expectation of continuation, OR $1,000,000 net worth excluding primary residence.

These aren't suggestions. They're legal requirements. Companies offering private securities (including startups raising capital) must verify investor accreditation. Platforms facilitating private investments check accreditation status. The verification happens before you can participate.

Some people think small investments don't count or requirements are flexible. Wrong. The thresholds apply regardless of investment amount. Investing $500 in startup requires same accreditation as investing $50,000.

Why requirements exist: Regulations aim to protect less sophisticated investors from high-risk investments they can't afford to lose. Theory is wealthier individuals can better absorb losses from speculative early-stage companies. Whether this paternalism makes sense is debatable, but it's current framework.

Violating requirements creates legal exposure for both you and companies. Companies can face SEC enforcement. You could face penalties. Most importantly, your investment might be voidable, you could lose money and protections.

As Elizabeth Yin, co-founder and GP of Hustle Fund, explains: "Most of your investments will return $0. You will lose money. So it's important to have great portfolio construction." Regulatory requirements exist partly because these harsh realities make angel investing inappropriate for people who can't afford substantial losses.

Limited Alternatives for Non-Accredited Investors

Equity crowdfunding platforms (Regulation Crowdfunding) allow non-accredited investors to participate with limits. Annual investment caps: if income and net worth are both under $124,000, you can invest greater of $2,500 or 5% of lesser of income/net worth. If income OR net worth exceeds $124,000, you can invest 10% of lesser of income/net worth up to $124,000 maximum.

Real constraints: $2,500-12,400 annual limit doesn't allow building proper 15-20 investment portfolio. At $500 per investment, you could make 5-25 investments total, not enough for adequate diversification. The companies on these platforms are often lower quality than institutional deal flow.

Quality concerns: Best startups typically raise from institutional investors and accredited angels, not through crowdfunding. Crowdfunding deals are often companies that couldn't raise from traditional sources. Adverse selection means you're seeing opportunities that professional investors passed on.

Limited educational infrastructure: Crowdfunding platforms provide minimal investor education compared to quality angel communities. You're making decisions without frameworks that help beginners avoid common mistakes.

The honest assessment: Equity crowdfunding is better than nothing but it's not substitute for traditional angel investing. The capital limits prevent proper diversification. The deal quality tends to be lower. The educational support is minimal.

Paths to Reaching Accreditation

Income path: If you're earning $150,000-180,000 currently, career advancement to $200,000+ might happen within 2-3 years. Focus on promotions, job changes, or skill development that increases income. Once you hit $200,000 for two consecutive years, you qualify.

Net worth path: If you have $700,000-900,000 in assets excluding primary residence, saving and investing to reach $1,000,000 might take 2-4 years depending on market returns and savings rate. Every dollar in retirement accounts, investment accounts, real estate equity (excluding primary residence), and other assets counts toward threshold.

Combined approach: Spouse's income counts toward joint $300,000 threshold. Combined net worth counts toward $1,000,000 threshold. Two people earning $160,000 each qualify through joint income even though neither qualifies individually.

Professional certification path: Recent rule changes allow holders of Series 7, Series 65, or Series 82 licenses to qualify as accredited investors. If you're in finance industry, obtaining relevant certification might be faster path than reaching income/net worth thresholds.

Time horizon: For most professionals in their 30s earning $100,000-150,000, reaching accreditation through career advancement takes 3-5 years. This feels long but it's realistic timeline.

As Eric Bahn, co-founder and GP of Hustle Fund, emphasizes: "For beginners, a bigger startup portfolio is better. It helps with diversification and helps you learn and get reps in. Investing requires practice like everything else." But that practice requires meeting legal requirements first.

Using Waiting Period Productively

While working toward accreditation, build foundation for future angel investing. Learn fundamentals through reading and research. Understand portfolio construction, realistic expectations, common structures, and evaluation frameworks.

Follow startup ecosystem. Read about company fundraising, founder journeys, investor perspectives, and market trends. Build pattern recognition about what makes startups succeed or fail even without investing capital.

Develop professional expertise. Whatever domain you work in (healthcare, finance, logistics, software, etc.), deepen your knowledge. This expertise will be valuable for evaluating startups in your domain once you qualify to invest.

Build savings. The capital you save now while working toward accreditation becomes risk capital for angel investing once you qualify. Saving $500-1,000 monthly for 3 years creates $18,000-36,000 angel investing budget.

Network with founders and investors. Attend startup events, join online communities, participate in discussions. You're building relationships and learning ecosystem without needing to invest yet. These networks become valuable when you qualify.

The years working toward accreditation aren't wasted. You're preparing so that when you do qualify, you're ready to participate effectively rather than starting from zero knowledge.

Why Waiting Might Be Better Than Alternatives

Attempting to circumvent requirements through creative structures usually fails and creates problems. Some people consider having accredited friend/family member invest on their behalf. This violates securities laws and creates tax complications.

Some people consider moving investments through entities they control. SEC looks through entity structures to underlying beneficial owners. If you're beneficial owner and not accredited, entity structure doesn't help.

Some people consider investing in funds or syndicates that don't verify accreditation properly. You're taking legal risk, and if structure unravels, you could lose both money and legal protections.

The legal and practical risks of workarounds exceed benefits. Better to wait 2-4 years, reach accreditation properly, and invest with full legal protections than attempt shortcuts that create problems.

Additionally, if you can't reach accreditation within reasonable timeframe, it signals that your financial situation makes angel investing inappropriate even if it were legal. The capital required for proper portfolio ($15,000-20,000 over 2-3 years) represents same proportion of net worth regardless of workarounds.

International Considerations

Different countries have different requirements. UK, Canada, Australia, and EU countries have accredited investor equivalents (sophisticated investor, qualified investor, etc.) with varying thresholds.

Some countries have more permissive regulations allowing broader retail investor participation in private securities. If you're outside US, research local requirements. You might have more options than US residents.

But fundamental challenge remains: Angel investing requires risk capital you can afford to lose. Regulatory status aside, if you don't have that capital, angel investing is inappropriate regardless of whether it's legally permitted.

The Honest Recommendation

If you're not accredited currently: Focus on reaching accreditation over next 2-4 years through career advancement, savings growth, or professional certification. Use waiting period to learn fundamentals and build foundation. Don't attempt workarounds that create legal risk without solving underlying readiness issues.

If reaching accreditation seems impossible or would take decade+: Angel investing probably isn't right fit for your financial situation. The capital requirements exist because losing substantial amounts on speculative investments should only happen when you can genuinely afford it. Focus on wealth building through accessible investment vehicles (index funds, real estate) until financial situation changes.

If you'll reach accreditation soon (1-2 years): Wait. The time cost is minimal compared to legal risks of attempting to circumvent requirements now. Use waiting period productively to prepare.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." But angel investors must meet regulatory requirements regardless of where they come from. The path forward is working toward qualification rather than seeking shortcuts.

When You Finally Qualify

Once you meet accreditation requirements, the path forward is straightforward. Join quality community supporting $1,000 minimums. Spend 4-8 weeks observing and learning. Make first investment. Continue building portfolio systematically.

Angel Squad will still exist in 2-4 years when you qualify. The infrastructure enabling $1,000 angel investing is sustainable and growing. The opportunity doesn't disappear while you work toward meeting requirements.

The preparation you do now (learning, networking, developing expertise, building savings) makes you better angel investor when you qualify than if you could start today without foundation.

The Bottom Line

You can't become traditional angel investor in US without accredited status. The limited alternatives (equity crowdfunding) have significant constraints and quality concerns. The best path is working toward accreditation over 2-4 years while using time productively to prepare.

This answer isn't what you wanted to hear. But it's honest assessment of regulatory reality and practical options. Shortcuts create problems without solving fundamental readiness issues. Patient path of reaching accreditation properly, while less exciting, produces better outcomes.

Angel Squad and similar communities will welcome you once you qualify. The $1,000 minimums, curated deal flow from Hustle Fund's pipeline, structured education, and community support exist for those who meet requirements. 

Work toward qualifying, prepare thoroughly during waiting period, and participate properly when ready rather than attempting workarounds that create more problems than they solve.