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An investor who does not meet the net worth requirements for an accredited investor under the Securities & Exchange Commission's Regulation D. A non-accredited individual investor is one who has a net worth of less than $1 million (including spouse) and who earned less than $200,000 annually ($300,000 with spouse) in the last two years.  When a company raises private equity for an investment, such as a new company or a hedge fund, it can receive unlimited investments from accredited investors. On the other hand, Regulation D stipulates only 35 non-accredited investors can invest money into a private placement.

Investment Limits for Non-Accredited Investors

While the updated Title III regulations allow non-accredited investors to participate in crowdfunded investments, it’s not a free-for-all. The SEC has opted to place restrictions on how much non-accredited investors can invest over a 12-month period. Your individual limit is based on your net worth and income. Accredited investors have no such restrictions.

If you make less than $100,000 per year or your net worth is below that amount, you can invest up to either the greater of $2,000 or the lesser of 5% of your income or net worth. If your annual income and your net worth exceed $100,000, you can invest up to 10% of your income or net worth, whichever is less, up to a total limit of $100,000. 

The SEC imposes this limit for a reason. The purpose is to curtail the risk to non-accredited investors who may not be as knowledgeable about crowdfunding or investing in general. By limiting how much you can invest, the SEC is also limiting how much you could lose if a investment falls flat.