Should We Broaden “Accredited”? Perhaps… but Not at the Expense of True Access
Why Expanding Accredited Investor Rules Might Shrink True Access
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I’m sympathetic to the impulse behind expanding the “accredited investor” definition. Knowledge isn’t the same as wealth, and investors who’ve earned relevant credentials or can demonstrate sophistication arguably deserve broader access to private markets. The SEC took a real step in this direction in 2020 when it began recognizing certain financial-industry licenses (like Series 7/65/82) and other sophistication measures—an overdue acknowledgment that acumen doesn’t always track with a bank balance.
As someone who holds an MBA and a finance degree and has previously held a portfolio of securities licenses, having run my own investment bank (licenses now expired), I believe the skills I’ve acquired better qualify me to make investment decisions than wealth ever could. I understand and share the view that tests of wealth are patronizing at best and are better seen as simply insulting.
But here’s the rub: expanding accreditation via tests doesn’t automatically expand access for working Americans. The private offerings most people want access to (the ones marketed under Reg D) commonly set minimums that are simply out of reach for households trying to invest $100 a month. We can talk ideals all day; minimum check sizes decide who walks through the door.
That’s not theory—it’s how many offerings are structured. You can see it in Form D filings, which disclose the “minimum investment accepted from any outside investor.” Recent examples show floors of $50,000, $100,000, and even multimillion-dollar minimums (for certain funds). These are real, recent filings—not one-off anecdotes.
Meanwhile, the parts of the market already designed for small-dollar participation—Reg CF and Reg A+—are working precisely because they let people start small and build positions over time. On many Reg CF portals, minimums begin at $100, with platform materials explicitly encouraging participation at that level. That’s the scale at which genuine democratization happens. At least two portals, Climatize and SMBX, have standardized minimums of $10 under Reg CF, and Worth Bonds issues impact bonds in $10 increments under Reg A+.
The Unintended Consequence Nobody Talks About
Here’s where my concern turns from principled to practical: if “near-accredited” investors (people just shy of today’s income/net-worth thresholds) are pulled toward higher-minimum Reg D deals by a broadened definition, two things may follow.
First, they’ll likely make fewer investments. A $5,000–$10,000 annual budget stretches nicely across ten $500–$1,000 checks in Reg CF/A+. It barely covers a single $10,000–$25,000 private placement minimum. Fewer positions mean less diversification—exactly the wrong direction for non-professional investors facing inherently risky early-stage opportunities. This isn’t controversial finance theory; it’s basic diversification, as emphasized by the SEC’s own investor education resources. Spread capital across more, not fewer, bets to reduce idiosyncratic risk.
Second, siphoning the most active small-check investors away from Reg CF/A+ could slow momentum where everyday investors already have a seat. Capital is not perfectly fungible across exemptions. Issuers considering a community round may get spooked if a chunk of the grassroots investor base migrates to private deals that require bigger checks. The result: fewer funded offerings overall in the only channels that truly admit the broader public.
To be clear, I’m not arguing that any expansion of accredited eligibility is bad. I am arguing that if the policy goal is to broaden participation and opportunity, then we should guard against changes that inadvertently pull energy and capital away from the one corner of private markets that works at $100 a time.
The Scale Mismatch Is Real
Look at the market’s current anatomy. Reg D remains the elephant in the room by capital raised; it dominates exempt offerings year after year. The SEC’s data visualizations make that plain—even as Reg CF and Reg A+ have grown, Reg D towers over them. That dominance means even a small shift in investor behavior away from CF/A+ can have an outsized effect on those smaller markets, because their investor bases—and individual check sizes—are so much smaller.
By contrast, retail-friendly exemptions are showing encouraging momentum. KingsCrowd’s mid-year report pegged H1 2025 investment crowdfunding at $447.4M, up ~60% year over year, with particularly strong growth in Reg A+. That’s a fragile but meaningful rebound after a choppy couple of years; it deserves nurturing, not neglect.
And the micro-economics of those rounds matter. In the SEC’s prior look-back, median Reg CF investments landed around $500, with average investments about $1,335, and investors making multiple small bets—exactly the behavior profile you want if you care about diversification for non-professionals. The point isn’t that yesterday’s numbers are today’s; it’s that the pattern—many small checks across multiple deals—fits the risk profile of early-stage investing better than a couple of concentrated private placements.
“But More Freedom Is Good, Right?”
I hear the counterargument: why shouldn’t more people who can demonstrate sophistication get access to more deals? I agree in principle. The 2020 modernization was a healthy step—recognizing knowledge as a pathway, not just net worth. And current small-business forums and SEC staff discussions continue to float additional sophistication-based expansions (investor tests, etc.). I’m not reflexively against that. I just don’t want “more access” on paper to translate into less participation in practice for the majority who invest in small increments.
If we’re going to broaden accredited status further, let’s pair that with safeguards and complementary reforms that keep the public square vibrant:
Protect the small-dollar on-ramp. Keep pushing friction out of Reg CF and Reg A+—whether that’s streamlining disclosures where appropriate, clarifying advertising rules, or exploring ways to reduce recurring compliance cost for smaller issuers without sacrificing investor protection. (Several of these ideas show up in small-business forum recommendations.)
Encourage diversification by design. If “near-accredited” investors are going to step into higher-minimum terrain, nudge them toward pooled vehicles by expanding access through Reg CF for fund managers rather than single-name private placements. That’s closer to prudence than one or two concentrated wagers. (The principle is straight off the diversification playbook.)
Signal minimums that welcome smaller checks. Issuers courting sophisticated but not ultra-wealthy investors can structure lower minimums (or tranche them) to avoid inadvertently excluding disciplined small allocators. The fact that many private placements disclose $50K–$100K minimums is a choice, not a law of nature.
A Note on Humility (and Evidence)
There’s a lot we still don’t know. I haven’t seen definitive, large-scale data proving that “near-accredited” investors who migrate to Reg D underperform versus those who stay diversified in CF/A+. What we do have is theory (diversification reduces unsystematic risk), patterns in offering minimums, and early evidence that small-check investment behavior tends to be repeat-oriented across multiple deals. That combination argues for caution. In early-stage investing, concentration risk is real—and costly—especially for non-professionals.
Where I Land
I’m for empowerment—but I’m for effective empowerment. If we expand accredited investor eligibility through tests, let’s do it in a way that doesn’t drain oxygen from the only part of private markets where true democratization is actually happening: the $100-at-a-time community rounds and mini-publics that let people diversify sensibly across many small bets.
So here’s my proposal: pursue sophistication-based pathways and double down on improving Reg CF / Reg A+. Make it easier—not harder—for everyday investors to participate and diversify, including by increasing (and simplifying) the Reg CF limits on annual investments. Encourage private issuers courting newly eligible investors to meet them where they are with more approachable minimums and diversified vehicles.
I know some will disagree, and I welcome the pushback. If you’re seeing different dynamics on your platform or in your portfolio—especially evidence that newly accredited small investors are more diversified after graduating to Reg D—I’d love to see the data. This is a debate worth having, because the stakes aren’t abstract. They’re the difference between a private market that includes the many versus one that, unintentionally, keeps tilting back to the few.
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