While most of the onerous changes to what defines an accredited investor were amended out of the new Financial Regulation law, some stayed in.
Here is the change that will affect the most. Investors must now have to have a total net worth of at least $1M excluding your personal residence. Both the Angel Capital Association and the SEC were happy with this change. Given the melt down in real estate over the last few years, it is probably a good idea to eliminate real estate as a part of liquid net worth!
This is important. If a non-accredited investor invests in a start up, the disclosure/registration requirements are much stiffer. This increases costs. So, it is in start up companies best interest to have only accredited investors in their capital pool. It also is important to note, if you don’t have the necessary assets as defined by the IRS to invest in companies, you are not precluded from doing so. There just is a higher bar of reporting requirements.