In a Regulation Crowdfunding offering all investors have a cap on how much they can invest in a 12 month period. When you invest through Umergence, we calculate the limitations for you when you invest, however these are the rules:
- If either of an investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of:
- $2,200 or
- 5 percent of the lesser of the investor’s annual income or net worth.
- If both annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10 percent of the lesser of their annual income or net worth.
- During the 12-month period, the aggregate amount of securities sold to an investor through all Regulation Crowdfunding offerings may not exceed $107,000, regardless of the investor’s annual income or net worth.
Spouses are allowed to calculate their net worth and annual income jointly.
(you can find further information about regulation crowdfunding offerings here: https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051316.htm)
In a Regulation A+ offering, investment limits will depend on your qualifications as an investor. If you are an accredited investor, you can invest as much as you want. Accredited investors have greater flexibility in the amounts they can invest than non-accredited investors. The Securities and Exchange Commission (the SEC), and the Financial Industry Regulatory Authority (FINRA) help to protect investors (especially small investors) from fraud. Regulations have established criteria (income and net worth thresholds, among other things) that, above which, an investor can be considered “accredited,” and have greater investment freedom at the expense of less regulatory protection.
There are 4 basic ways to be considered an accredited investor:
- income of $200,000 for an individual (or $300,000 for joint consideration with a spouse) for the previous 2 years and the expectation of continuing to make at least the same amount currently;
- a net worth of $1,000,000 either individually or with a spouse (you can’t include your primary residence in this calculation);
- hold a position of general partner, executive officer, or director of the issuer of the securities being invested in; or
- be a registered broker or investment advisor.
(there are also some less common applications of investor accreditation in the current legal definition that can be found here - https://www.law.cornell.edu/cfr/text/17/230.501)
If you are not an accredited investor, in a Regulation A+ offering you can invest:
- an unlimited amount if the offering is a Regulation A+ Tier I offering
- an amount up to the greater of either 10% of your net worth or 10% of your net income if the offering is a Regulation A+ Tier II offering
In a Regulation D offering typically only accredited investors can invest, and there are no investment limitations.