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 accredited investor requirement frustrates many people interested in angel investing. You might have knowledge, interest, and some capital but fall short of income or net worth thresholds.

Can you invest in startups without accreditation? Yes, with significant limitations. Should you? Maybe, depending on goals and timeline.

What's actually available and whether it's worth pursuing.

The Accredited Investor Reality

US Requirements

Accredited investor status requires either $200,000 annual income ($300,000 jointly) for past two years with expectation of same going forward, OR $1,000,000 net worth excluding primary residence. These are federal securities law requirements, not arbitrary gatekeeping.

Recent rule changes added professional certification options (Series 7, 65, or 82 licenses, or knowledgeable employees of private funds), but these don't help most people.

Why Requirements Exist

Securities regulations aim to protect unsophisticated investors from high-risk investments they can't afford to lose. The theory is that wealthier individuals can better absorb losses from speculative investments like early-stage startups.

Whether this logic makes sense is debatable, but it's current regulatory framework. Working around it requires understanding what's actually permitted versus what violates securities laws.

Other Countries' Rules

Many countries have similar requirements under different names (sophisticated investor, qualified investor, etc.). Some have lower thresholds or different criteria. If you're outside the US, research your jurisdiction's specific rules.

This guide focuses primarily on US regulations but principles apply internationally.

Legitimate Options for Non-Accredited Investors

Regulation Crowdfunding (Reg CF)

Under Regulation Crowdfunding, companies can raise up to $5 million annually from non-accredited investors through registered platforms. Individual investment limits depend on your income and net worth:

If annual income and net worth are both under $124,000: can invest greater of $2,500 or 5% of the lesser of income or net worth per year across all Reg CF offerings.

If either income or net worth is $124,000 or more: can invest up to 10% of the lesser of income or net worth, up to $124,000 annually.

As Elizabeth Yin, co-founder and GP of Hustle Fund, notes: "Getting deal flow & education have been the bigger blockers to date" for new investors. Reg CF platforms theoretically provide deal flow but quality varies dramatically from professional angel investor pipelines.

The Reg CF Reality Check

Crowdfunding platforms like Republic, Wefunder, and StartEngine enable non-accredited participation. However, quality of opportunities is generally lower than what accredited angels see. Better companies typically raise from accredited investors who can write larger checks more quickly.

Reg CF companies also face different disclosure requirements and ongoing reporting obligations that some avoid by raising through traditional accredited-only methods. You're often seeing companies that couldn't or didn't want to raise from accredited angels.

Regulation A+ Offerings

Regulation A+ allows companies to raise up to $75 million from both accredited and non-accredited investors. These are more established companies than typical angel investments, often with revenue and clearer paths to profitability.

Investment minimums tend to be higher ($1,000-10,000) and you're investing in later-stage companies than traditional angel stage. This is more similar to late-stage growth equity than angel investing.

Accredited Investor Verification Exemptions

Some states allow intrastate crowdfunding under state-specific exemptions. Texas, for example, has regulations permitting non-accredited in-state investors to invest in in-state companies. Research what your state permits if you're interested in local startup ecosystem.

These exemptions are narrow and typically require both company and investor to be in same state. Deal flow is extremely limited compared to national platforms.

International Opportunities

Investing in Non-US Startups

Some non-US jurisdictions have different accreditation requirements or allow foreign investors regardless of status. However, you face tax complexity, legal uncertainty about investor protections, and difficulty with due diligence on companies in unfamiliar regulatory environments.

This option is theoretically available but practically challenging unless you have specific expertise or connections in target geography.

Moving or Structuring Internationally

Some people consider establishing residency in jurisdictions with more favorable rules or using offshore entities to invest. This introduces significant legal and tax complexity. Don't pursue without professional legal and tax advice, and recognize that poorly structured arrangements can create major problems.

Building Toward Accreditation

The Practical Path

For most people interested in angel investing who aren't currently accredited, better strategy is focusing on becoming accredited rather than trying to work around requirement.

If you're early in career earning $100,000-150,000, you're potentially 2-5 years from meeting income threshold. Focus on career advancement and income growth. Invest that time learning about angel investing so you're prepared when you qualify.

If you're later in career with lower income but building net worth, focus on reaching $1,000,000 net worth excluding primary residence. This might involve saving aggressively, building business, or investment appreciation.

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." Use time before accreditation to practice evaluation skills even if you can't invest real capital yet.

Learning Without Investing

Join communities as observer if they permit it. Attend demo days and pitch events. Follow startup news and analysis. Study how experienced investors evaluate opportunities. Read pitch decks and practice forming investment opinions.

This learning is valuable even without ability to invest immediately. When you qualify for accreditation, you'll have frameworks already developed rather than starting from zero.

Angel Groups That Accept "Apprentice" Members

Some traditional angel groups allow non-accredited members to participate in educational programming and observe pitch sessions without investing. They're building pipeline of future members who'll qualify eventually. Research whether local groups offer this.

What You're Missing (And Not Missing)

What Non-Accredited Investors Miss

Access to highest-quality deal flow. Best startups raise from accredited investors who can write meaningful checks ($5,000-25,000+) and provide strong value-add beyond capital. Professional investors curate best opportunities and share them within accredited networks.

Ability to build properly diversified portfolios. With Reg CF limits ($2,500-124,000 annually depending on income/net worth), you can't build 15-20 investment portfolios with meaningful check sizes. You're forced into either too few investments or amounts too small to be economically significant.

Educational infrastructure and community support. Most high-quality educational programming and investor communities serve accredited investors. The learning environment is significantly richer on accredited side.

What You're Not Missing

Guaranteed returns. Accredited investors also lose money frequently. Accreditation doesn't provide investing skill or guarantee success. Many accredited angels lose substantial capital through poor decisions.

Most startups fail regardless of investor accreditation status. The companies available through Reg CF have same high failure rates as those available to accredited investors.

The Honest Assessment

Being non-accredited is significant limitation for serious angel investing. The workarounds exist but provide dramatically inferior experience compared to what accredited investors access. If you're serious about angel investing, focus on qualifying for accreditation rather than trying to build meaningful practice around limitations.

If You Decide to Pursue Reg CF Anyway

Platform Selection

Research platforms carefully. Republic, Wefunder, and StartEngine are largest and most established. Smaller platforms exist but often have lower-quality deal flow and less rigorous vetting.

Read platform fee structures thoroughly. Understand what percentage they take from your investment returns. Some structures are quite expensive.

Due Diligence Limitations

Reg CF offerings provide less disclosure than traditional private placements. Company financials and business details may be limited. Your ability to conduct thorough due diligence is constrained.

Assume higher information asymmetry than accredited investors face. Price your investments accordingly (be more conservative about valuations and prospects).

Portfolio Construction Challenges

With annual limits, building 15-20 investment portfolio takes many years or requires very small check sizes ($250-500 each) that have minimal economic significance.

You're forced to choose between proper diversification (many small investments) or meaningful economic exposure (fewer larger investments). Neither option is ideal.

Realistic Expectations

Expect lower-quality opportunities and worse returns than accredited investors typically see. This isn't guaranteed but is statistically likely given structural disadvantages.

Consider Reg CF investing primarily as learning experience rather than wealth-building strategy. If you eventually qualify for accreditation, the knowledge gained will be valuable. But don't expect strong financial returns.

Alternative Ways to Gain Exposure

Public Market Venture Exposure

Some publicly traded vehicles provide exposure to venture-stage companies: ARK Innovation ETF (ARKK) holds high-growth companies, Renaissance IPO ETF (IPO) invests in recent IPOs, and individual stocks of recently public companies provide similar risk/return profiles.

These aren't identical to angel investing but provide some exposure to high-growth company ecosystem without accreditation requirements.

Working at Startups

Joining startup as employee provides equity compensation that gives you exposure to startup outcomes. You're trading labor for equity rather than capital for equity, but economic exposure is similar.

This also builds knowledge and networks that help if/when you qualify for accredited investing.

Building Your Own Startup

Instead of investing in others' startups, build your own. This requires different skills and commitment but provides ultimate exposure to startup ecosystem.

Many successful angel investors started as founders. The operational experience informs later investing decisions.

As Shiyan Koh, co-founder and GP of Hustle Fund, notes: "Great founders can look like anyone and come from anywhere." You might be one of those great founders rather than investor backing them.

The Three-Year Plan

Year 1: Learn and Qualify

Focus on career advancement to increase income toward accreditation thresholds. Study angel investing through free content, books, podcasts, and observation. Build evaluation frameworks and knowledge base.

Year 2: Continue Progress

If income is approaching $200,000 or net worth approaching $1,000,000, you're close. Maintain focus on qualification. Continue learning. Consider small Reg CF investments purely for educational experience if interested.

Year 3: Achieve Accreditation

Once qualified, join proper angel investing community immediately. Your prior learning means you can start investing intelligently rather than spending another year or two on basics.

Three years from now, you could be active accredited angel investor with strong foundation from preparation period.

The Uncomfortable Truth

Non-accredited investors face significant barriers to meaningful angel investing participation. The regulatory framework deliberately restricts access to protect less wealthy individuals from high-risk investments.

While this protection may seem paternalistic, the reality is that early-stage startup investing requires capital you can genuinely afford to lose completely, ability to build diversified portfolios, and access to quality deal flow and education. These factors correlate with higher income and net worth, even if imperfectly.

For those serious about angel investing who don't currently qualify, the most practical path is:

Focus on qualifying for accreditation (2-5 year timeline for most people). Use that time learning frameworks and building knowledge. Make very limited Reg CF investments only for educational purposes with full understanding of limitations. Recognize that meaningful angel investing practice requires accreditation in current regulatory environment.

Angel investing infrastructure is more accessible than ever for accredited investors through communities like Angel Squad (with $1,000 minimums, curated deal flow from Hustle Fund's professional pipeline, and structured education). But these advantages remain largely unavailable to non-accredited individuals due to securities regulations.

The good news: if you're successful enough to be interested in angel investing, you're likely on path to qualifying for accreditation within several years. Use that time preparing so you can start strong when qualified.