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Accredited investor tests: How to balance, access, entrepreneurial funding, and investor protection?

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  • Mark Humphery‐Jenner

Abstract

Regulators seek to balance investor protection with the costs of that protection. This often leads to a distinction between “accredited” and “retail” investors. Only “accredited” investors can invest in certain “risky” or “illiquid” assets, including start‐ups and wholesale funds. But what should be the “bar” to be classified as “accredited”? Should people be able to qualify via income, wealth, or education? Should they be able to self‐certify? Thus, this article considers the situation in the US, UK, and Australia and argues in favour of letting people qualify via wealth, income, and education and being able to self‐certify.

Suggested Citation

  • Mark Humphery‐Jenner, 2025. "Accredited investor tests: How to balance, access, entrepreneurial funding, and investor protection?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(1), pages 1047-1058, March.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:1:p:1047-1058
    DOI: 10.1111/acfi.13366
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    References listed on IDEAS

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    1. Douglas Cumming & Minjie Zhang, 2019. "Angel investors around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(5), pages 692-719, July.
    2. Johan, Sofia & Reardon, Robert S., 2024. "The role of platform stakes in equity crowdfunding success," Finance Research Letters, Elsevier, vol. 69(PA).
    3. Xu, Jiajie, 2023. "Is There a Trade-off Between Protecting Investors and Promoting Entrepreneurial Activity? Evidence from Angel Financing," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(8), pages 3305-3341, December.
    4. Kazem Mochkabadi & Christine K. Volkmann, 2020. "Equity crowdfunding: a systematic review of the literature," Small Business Economics, Springer, vol. 54(1), pages 75-118, January.
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