What is an Accredited Investor? | Film Investors, High Net Worth (HNI)

What is an Accredited Investor?

Finding Legal Film Investors

Recent legislative changes make it more important than ever for film makers to know for sure, what is an accredited investor? The Securities and Exchange Commission recently eliminated the prohibition against general solicitation and general advertising in certain securities offerings. Companies are now permitted to use general solicitation and general advertising to offer securities under Rule 506 of Regulation D of the Securities Act and Rule 144A of the Securities Act. More info: JOBS Act and Film Financing. The US government did this in order to reduce barriers for small companies raising capital.

You have your script, director and are ready to make your movie. You even took the appropriate steps to create a Private Placement Memorandum (PPM), and are ready to publicly advertise, also known as "general solicitation," your offer to accredited investors. Who are they?

In summary, an accredited investor makes $200,000 per year (or $300,000 with a spouse) or has a net worth of $1 million. The new rule permitting general solicitation of Rule 506 private placements includes a requirement that the issuer (that's you, the filmmaker) "take reasonable steps to verify" all purchasers are Accredited Investors. So, what is an accredited investor and how do you take these 'reasonable' steps in order to satisfy the SEC?

The first thing to know is that self-certification is not deemed reasonable. You may not just take someone's word that they meet the legal guidelines qualifying them as an accredited investor.

If you can’t just take someone’s word for it, what are reasonable steps you may take to verify an investor?

Some of those steps could include:

  • Pay stubs
  • Recent income tax returns/reporting forms
  • Doing a broker check on the FINRA site to verify status
  • Bank/Brokerage statements
  • Credit reports

There are going to be some investors that do not want to share this information with you. If this is the case, there are other options. You can obtain written confirmation from one of the following:

  • A registered broker dealer
  • SEC registered investment adviser
  • Licensed attorney
  • Certified public accountant

Your Idea on the Big Screen

Are you putting your film together and need help with your proposal and the details of fundraising and working with accredited investors? Whether you just need a gentle nudge or a giant push, check out one of FilmProposals Business Plan Services today!

How to Work with Film Investors

How to Work with Film Investors

Film Investor Guide

Film Investor Guide

While our FilmProposals Bundles & Toolkits will save you hundreds of hours with prewritten text and templates and speed up your learning curve by showing you how to complete complicated financial projections, there is still a lot of information to process. We designed this FREE Film Business Plan Course to be sent once per week to break the process of writing your business plan into manageable pieces, and to keep you accountable and focused. In case you can't see the sign up form, try here.

FilmProposals - 2024 Financing Toolkits & Bundles

DIY Toolkits, Legal & Finance Service Bundles
See All Financing Toolkits, Financing Bundles & Film Legal Packs

Gold Toolkit + Financials Bundle

Most Popular
$699
Coming Through the Rye

Just want to thank you for your materials and help over the past year. I could not have raised the $1.5 million or made this film without the materials you provided. The bargain of my career!
- James Sadwith, Producer, Writer, Director, Coming Through the Rye

Inside Sportfishing

Finished my deck on Friday. Got it into a few potential investor’s hands over the weekend, and by Monday had 3 out of the 10 available memberships spoken for at $160K each. The revenue projections and film comparable services by NASH, along with the business plan and pitch deck templates were instrumental in presenting the project in such a way that financially minded potential investors could understand the movie business, the market and how my project could possibly give them a substantial ROI.

Melissa was amazing throughout the entire process. Always there to answer any questions. Couldn’t have done it without you guys. Can’t thank you enough. Best money I’ve ever spent.
- Michael F, Executive Producer, Inside Sportfishing (Gold + Financials Bundle)