The Accredited Investor Questionnaire: A Founder's Guide to Reg D Compliance
Every time you accept a check from a private investor in the United States, you are relying on an exemption from securities registration. The most common exemption — Regulation D — requires that your investors meet a specific legal definition: they must be accredited investors. The document that proves it is the Accredited Investor Questionnaire.
Most founders treat the questionnaire as paperwork. It is not. It is the single piece of evidence that stands between your company and a rescission action from the SEC or a state regulator years down the road. This guide walks through the questionnaire section by section, explains what each category actually means, and shows you how to collect and store the answers so the round holds up under scrutiny.
The Securities Act of 1933 makes it illegal to sell securities in the United States unless the offering is either registered with the SEC or falls under a valid exemption. Startups almost never register — registration is what public companies do when they IPO. Instead, private companies rely on exemptions, most commonly Rule 506(b) or Rule 506(c) of Regulation D.
Both rules let you raise an unlimited amount of capital from an unlimited number of accredited investors. The catch is that you, the issuer, are responsible for confirming each investor's accredited status. Under 506(b) you can accept the investor's self-certification. Under 506(c) — which is what you must use if you generally solicit or advertise the round — you must take reasonable steps to verify accredited status, which is a higher bar.
The questionnaire is how you document that confirmation. Without it, your exemption is at risk. And if the exemption fails, every investor in the round has the right to demand their money back, plus interest, for up to a year after they discover the violation.
The SEC updated the definition of accredited investor in 2020 and again in 2023. Today, an individual qualifies under any one of the following:
Income test. Individual income above $200,000 (or joint income with a spouse or spousal equivalent above $300,000) in each of the two most recent years, with a reasonable expectation of the same in the current year.
Net worth test. Individual or joint net worth above $1,000,000, excluding the value of the primary residence.
Professional certification test. Holders in good standing of the Series 7, Series 65, or Series 82 licenses.
Knowledgeable employee test. Certain employees of the private fund making the offering.
Family office test. A family office with at least $5,000,000 in assets under management, and the family clients of such an office.
Any trust with total assets over $5,000,000, not formed for the specific purpose of acquiring the securities, whose purchase is directed by a sophisticated person.
Any revocable trust (such as a living trust) where every grantor is themselves accredited.
Any corporation, partnership, or LLC with total assets over $5,000,000, not formed for the specific purpose of acquiring the securities.
Any entity in which all of the equity owners are accredited investors.
Registered investment companies, banks, insurance companies, and business development companies.
Any entity, of any type, that owns "investments" of more than $5,000,000 and was not formed for the specific purpose of acquiring the securities offered.
These categories map directly to the checkboxes on the questionnaire. Understanding each one is not optional — you need to know which box each investor is claiming so you can evaluate whether the claim is credible.
The individual section asks the investor to check one of two boxes: the net worth test or the income test.
Net worth. The investor represents that they have a net worth — alone or jointly with a spouse — in excess of $1,000,000. The definition matters: net worth means total assets minus total liabilities, and it excludes the primary residence as an asset. If the mortgage on the primary residence exceeds the fair market value of the residence, the excess counts as a liability. This last rule catches many well-intentioned investors during downturns and is worth flagging in your onboarding process.
Income. The investor represents that they had income above $200,000 individually (or $300,000 jointly with a spouse) in each of the two most recent tax years and reasonably expects the same in the current year. Both years must be met — a single high-income year does not qualify. And the investor must have a reasonable expectation of continuing that income, which is a subjective test the investor is affirming under penalty of misrepresentation.
For 506(b) offerings, the investor's checkmark and signature is generally sufficient. For 506(c) offerings, you need documentary evidence: tax returns for the income test, or a written confirmation from a licensed attorney, CPA, registered broker-dealer, or investment adviser for the net worth test.
Trusts trip up founders more than any other category. A trust qualifies as accredited in one of two ways:
Revocable trust owned by accredited grantors. If the trust is revocable (like a typical living trust) or was formed for the purpose of acquiring the securities, every grantor must individually qualify as accredited. The questionnaire requires listing each grantor and identifying the category under which they qualify. $5 million asset test. The trust has more than $5,000,000 in total assets, was not formed for the specific purpose of acquiring the securities, and its investment decision is directed by a "sophisticated person" — someone with the knowledge and experience in financial and business matters to evaluate the merits and risks of the investment.
Irrevocable trusts that do not meet the $5 million test and were not directed by a sophisticated person do not qualify — even if the beneficiaries would qualify individually. This is a common trap. If an investor is signing on behalf of an irrevocable trust, ask for the trust document and confirm the structure before you accept the money.
The entity section has several sub-categories. The most common:
$5 million entity test. Corporations, partnerships, LLCs, and certain other entities with more than $5,000,000 in total assets qualify — as long as they were not formed specifically to invest in your offering. This last clause exists to prevent people from spinning up a shell LLC to pool non-accredited money.
All-accredited-owners test. An entity in which every equity owner is themselves accredited qualifies, regardless of the entity's own assets. If you accept a check from a small investment vehicle, you must get each underlying owner to complete their own accredited investor questionnaire and represent their status.
Institutional categories. Banks, insurance companies, registered investment companies, business development companies, employee benefit plans with more than $5 million in assets, and similar regulated entities automatically qualify. $5 million investments test. Under the 2020 amendments, any entity (including new types like family offices, Native American tribes, and government bodies) that owns more than $5,000,000 in "investments" as defined under the Investment Company Act qualifies.
Regulation D's accredited investor requirement applies only to U.S. persons. If your investor is not a U.S. person as defined under Regulation S, you rely on a different exemption (Regulation S) and the accredited investor questionnaire is not the operative document — you need a Regulation S subscription package instead.
Most modern questionnaires include a threshold representation asking the investor to confirm they are a U.S. person. If they check "no," route them to your Reg S paperwork rather than the accredited investor sections. Do not accept money from an investor who is neither accredited under Reg D nor a valid non-U.S. person under Reg S.
Rule 506(d) disqualifies an issuer from using Rule 506 if any covered person — directors, executive officers, 20% beneficial owners, promoters, and certain investment managers — has a disqualifying event (fraud conviction, SEC enforcement action, etc.) in their history. The questionnaire typically asks the investor to confirm whether they are a "covered person" and, if so, whether any disqualifying events apply. If the answer is yes, do not accept the investment without securities counsel review.
The signature block is not decoration. It is the single most important piece of evidence in the entire document. It must be:
Signed by the investor personally (or by an authorized signatory of the entity).
Store the signed original — or an executed electronic version — in the data room permanently. Do not throw it away after the round closes. The look-back period for rescission and enforcement actions extends for years.
The process matters as much as the document itself. Sloppy collection is why exemptions fail.
Send the questionnaire before the wire. Do not accept funds first and paperwork later. Once the money is in your account and the SAFE or note has been countersigned, you have already relied on the exemption. If the questionnaire never comes back, you have a problem.
Use an e-signature platform with an audit trail. DocuSign, HelloSign, Docusign CLM, and similar tools capture IP address, timestamp, and signature workflow — all of which strengthen your evidence file.
Match the questionnaire to the subscription agreement. The name on the questionnaire, the entity type, the address, and the signatory must match the subscription agreement and the wire receipt. Mismatches signal fraud risk and must be resolved before closing.
Store questionnaires alongside the closing binder. Every round needs a closing binder that contains the executed SAFE or note, the subscription agreement, the accredited investor questionnaire, and any verification documentation. Store the binder in your data room in a folder named for the closing date.
Retain records for at least six years. State securities laws generally impose statute of limitations periods of three to five years, and federal look-backs can extend further. Keep records indefinitely if you can.
Under 506(b) — no general solicitation — an investor's self-representation on the questionnaire is generally sufficient. You can rely on the checkmark. This is why most seed rounds run under 506(b): the paperwork is lighter and the verification burden is minimal.
Under 506(c) — general solicitation allowed — self-representation is not enough. You must take reasonable steps to verify accredited status. The SEC has published a non-exclusive safe harbor list:
Income test verification. Review IRS Form W-2, 1099, K-1, or Form 1040 for each of the two most recent years and obtain a written representation that the investor reasonably expects to meet the threshold in the current year.
Net worth test verification. Review bank statements, brokerage statements, tax assessments, and a consumer credit report — all dated within the last three months — and obtain a written representation about liabilities.
Third-party letter. A written confirmation from a licensed CPA, attorney, registered broker-dealer, or SEC-registered investment adviser stating that they have taken reasonable steps to verify accredited status within the last three months.
If you are running a 506(c) round — for example, you tweeted about the raise — the questionnaire alone is not enough. You need the underlying documentation or the third-party letter. Verification services like Parallel Markets, VerifyInvestor, and Assure can automate this for a per-investor fee.
Accepting checkbox answers that contradict what you know. If an investor checks "accredited by net worth" but you know they just left a coding bootcamp, the questionnaire does not cure your knowledge. You cannot rely on a representation you have reason to disbelieve.
Skipping the questionnaire for "friends and family." Every U.S. investor needs to complete the questionnaire, no exceptions — including your college roommate. Friends and family rounds are audited at the same standard as institutional rounds.
Using an outdated questionnaire. The definition of accredited investor changed in 2020. If your questionnaire template predates that update, you are missing the new categories (professional certifications, knowledgeable employees, family offices, investments test). Refresh your template.
Failing to update for later closings. If you hold multiple closings in the same round, each new investor needs their own questionnaire and each existing investor may need a bring-down representation. Do not assume that a questionnaire signed six months ago still stands.
Losing the paperwork. Questionnaires that cannot be produced during diligence for the next round — or during an SEC inquiry — are worse than never having been signed. Store them in a system you will still control in ten years.
Waive fraud liability. No representation cures actual fraud or material misstatement in your offering documents.
Replace state law compliance. Most states have "blue sky" filings tied to Regulation D. The questionnaire helps with the federal exemption but you still need to file Form D and any state notices.
Guarantee the investor is sophisticated. Accredited status is a wealth test, not a knowledge test. You still owe a duty of honest disclosure to every investor, accredited or not.
Cover secondary transactions. If an investor later sells their SAFE or shares to a third party, that secondary transaction needs its own exemption and its own diligence. The original questionnaire does not travel.
The accredited investor questionnaire is a 5-page document that protects the entire capital structure of your company. Treat it like the load-bearing legal instrument it is. Use a modern template. Send it before you accept money. Collect the underlying evidence when you rely on 506(c). Store the executed versions permanently. And when in doubt, run the file past a securities lawyer before you close.
Founders who take the questionnaire seriously never think about it again after the round closes. Founders who cut corners on it spend the next decade hoping nobody checks.
