Lexicon

A term defined by the Securities and Exchange Commission to refer to investors who are financially sophisticated and have a reduced need for the protection provided by mandated disclosures that are produced when a securities offering is registered with the SEC. Accredited investors typically have individual income of more than $200,000 per year ($300,000 with their spouse), or have a net worth of over $1 million excluding home value. Accredited investors also include the general partners, officers, and directors of the company offering securities.

Anyone who invests his or her own money in a startup at the very early stage of a company’s life. That means if you invest in a startup, you are acting as an “angel” by providing financial backing to the entrepreneurial venture. Angels do not have to be millionaires, but they do need to be financially sound enough to withstand losing their investment.

QIBs are allowed to buy private placements under SEC Rule 144A. These offerings are generally not registered with the SEC and so are only available to those whom the courts have found able to "fend for themselves." These include institutions that manage at least $100 million of securities not affiliated with itself, or a registered broker-dealer investing at least $10 million in non-affiliate securities.

Financial capital provided to startup companies. The typical venture capital investment occurs after the initial seed funding, angel investment or crowdfunding round, when the company has demonstrated that the idea is feasible (sometimes called a "proof of concept"). Venture capitalists usually get a large portion of the company's ownership and significant control over company decisions.