Raising Capital From Accredited Investors Could Change: What the SEC’s New Private-Market Proposals Mean for Startup Founders
For startup founders raising private capital, one question appears repeatedly:
Who can legally invest in my company?
For many startups relying on Regulation D, particularly Rule 506(b), the answer often turns on whether prospective investors qualify as “accredited investors.”
On September 30, 2026, the Securities and Exchange Commission took several steps that could eventually change the private-market landscape. The SEC proposed amendments intended to expand retail access to private-market investment strategies and, separately, requested public comment on additional ways individuals might qualify as accredited investors.
One of the most significant concepts under consideration is straightforward: Should someone be able to demonstrate that they are sophisticated enough to participate in private offerings based on knowledge or professional credentials rather than primarily on wealth?
The SEC is considering whether individuals could qualify through a new FINRA-administered accredited investor examination or through specified professional credentials, potentially including CPA, CFA, CFP, Series 79, and Series 86/87 credentials.
For founders, that could eventually mean a larger universe of individuals eligible to invest as accredited investors in private companies.
But there is an important qualification:
The accredited investor definition has not yet been expanded as a result of this announcement.
Founders raising capital today should continue applying the rules currently in effect.
Why Accredited Investor Status Matters to Startups
Private companies cannot simply sell securities to anyone they choose without considering federal and state securities laws.
When a startup sells stock, preferred stock, convertible notes, SAFEs, membership interests, or other instruments that constitute securities, the transaction generally must either be registered with the SEC or qualify for an exemption from registration.
Most early-stage companies do not conduct registered public offerings. Instead, they rely on exemptions.
One of the most important is Regulation D.
Rule 506(b), for example, permits an issuer to raise an unlimited amount of capital and generally allows sales to an unlimited number of accredited investors, along with up to 35 non-accredited investors who satisfy specified sophistication requirements. The participation of non-accredited investors also creates additional disclosure obligations.
Rule 506(c), by comparison, permits general solicitation but requires all purchasers to be accredited investors and requires the issuer to take reasonable steps to verify their accredited status.
That makes the definition of “accredited investor” highly consequential for startup fundraising.
How Does an Individual Currently Qualify as an Accredited Investor?
Accredited investor status is not limited exclusively to millionaires.
Under existing SEC rules, individuals may qualify through several pathways, including certain financial thresholds and certain professional credentials already recognized by the SEC.
Among the familiar financial tests, an individual may qualify based on:
Net worth exceeding $1 million, individually or jointly with a spouse or spousal equivalent, excluding the value of the person's primary residence, subject to the applicable rules; or
Income exceeding $200,000 individually, or $300,000 jointly with a spouse or spousal equivalent, in each of the two most recent years, together with a reasonable expectation of reaching the applicable threshold in the current year.
The SEC previously expanded the definition to recognize certain knowledge-based qualifications. Certain holders in good standing of the Series 7, Series 65, and Series 82 licenses may already qualify as accredited investors.
The September 2026 initiative potentially takes that concept significantly further.
What Is the SEC Considering?
The SEC's September 30 action should be understood as several related—but legally distinct—developments.
The Commission proposed amendments concerning performance-based compensation for investment advisers and changes involving interval funds and certain registered closed-end funds. Those proposals are intended, among other things, to facilitate greater retail access to private-market investment strategies through regulated structures.
Separately, the Commission is considering additional ways for natural persons to qualify as accredited investors.
A Potential Accredited Investor Exam
One possibility is a new examination developed by the Financial Industry Regulatory Authority, or FINRA.
According to the SEC, such an examination could provide a non-financial pathway through which an individual demonstrates sufficient sophistication regarding securities, investing, financial matters, and business matters to evaluate the merits and risks of an investment.
Conceptually, this raises an important policy question.
Should access to private investments depend primarily upon how much money an individual earns or owns?
Or should a person who can demonstrate sufficient investment knowledge also be permitted to participate?
For the startup ecosystem, the answer could have practical consequences.
Additional Professional Credentials
The Commission is also considering whether certain professional licenses, certifications, or credentials should qualify an individual as an accredited investor.
The credentials being considered include:
Certified Public Accountant (CPA);
Chartered Financial Analyst (CFA);
Certified Financial Planner (CFP);
FINRA Series 79 Investment Banking Representative license; and
FINRA Series 86 and Series 87 Research Analyst licenses.
These would supplement, rather than merely replicate, the professional credential pathways already recognized under the accredited investor framework.
What Could This Mean for Startup Founders?
The immediate answer is: nothing changes yet.
The more interesting answer concerns what could happen if the SEC ultimately expands the accredited investor pathways.
1. The Potential Accredited Investor Pool Could Grow
Suppose a startup founder is raising a seed round under Rule 506(b).
The founder may know experienced accountants, financial professionals, executives, or other sophisticated individuals who understand private-company investments but do not satisfy the existing wealth or income thresholds.
Depending on what the SEC ultimately adopts, some individuals currently outside the accredited investor definition could potentially qualify based on credentials or demonstrated investment knowledge.
For founders, that could expand the potential pool of accredited angel investors.
It could be particularly relevant to founders raising smaller friends-and-family, pre-seed, and seed rounds where individual investors—rather than institutional venture capital funds—play a significant role.
2. Professional Networks Could Become More Important Sources of Capital
Founders frequently begin fundraising within their existing networks.
Those networks may include attorneys, accountants, financial professionals, consultants, executives, entrepreneurs, and industry specialists.
Under a framework that recognizes additional professional qualifications or an investor examination, more people within those networks could potentially qualify as accredited investors without satisfying a wealth test.
That could change how some startups think about early-stage investor outreach.
It would not eliminate securities-law restrictions on fundraising. It could, however, change who is eligible to participate as an accredited investor.
3. It Could Reduce Some Friction in Rule 506(b) Offerings
Rule 506(b) technically permits participation by a limited number of qualifying non-accredited investors.
But accepting non-accredited investors can materially complicate an offering because additional disclosure requirements apply when non-accredited investors participate.
As a result, many early-stage companies structure their Rule 506(b) offerings for accredited investors only.
If additional investors eventually qualify as accredited based on credentials or an examination, some startups could have a larger pool of prospective investors without introducing the additional requirements associated with admitting non-accredited investors.
4. It Does Not Mean Startups Can Advertise Rule 506(b) Offerings to Everyone
This distinction is critical.
Expanding the accredited investor definition would not eliminate the differences between Rule 506(b) and Rule 506(c).
Rule 506(b) generally prohibits general solicitation.
Rule 506(c) permits general solicitation, but all purchasers must be accredited investors and the issuer must take reasonable steps to verify their accredited status.
Accordingly, even if the population of accredited investors grows, founders would still need to determine which exemption they are relying upon and comply with the conditions of that exemption.
A larger eligible investor population does not turn a private offering into an unrestricted public fundraising campaign.
What About SAFEs and Convertible Notes?
Founders sometimes mistakenly assume securities laws become relevant only when the company sells stock.
That is not the case.
A SAFE, convertible promissory note, preferred stock financing, common stock issuance, and certain LLC membership interests can constitute securities.
Calling a financing a “friends and family round” also does not create a securities-law exemption.
The company still needs to identify and comply with an available exemption from registration.
That is why the accredited investor definition matters even at the earliest stages of a company's lifecycle.
This Is Part of a Larger Private-Market Shift
The accredited investor discussion is only one component of the SEC's September 30 initiative.
The Commission also proposed changes that would:
Expand circumstances in which registered investment advisers may receive performance-based compensation;
Require additional disclosure concerning performance-based compensation;
Modernize the framework applicable to interval funds; and
Establish a rules-based framework allowing certain regulated closed-end funds to issue multiple share classes.
Chairman Paul Atkins characterized the initiative as an effort to explore greater individual-investor participation in private markets while maintaining protections against fraud and misconduct.
For founders, the significance is broader than any single amendment.
Private companies have become an increasingly important component of capital markets, and the SEC is actively considering how individual investors should be permitted to obtain exposure to those markets.
If the investor eligibility framework expands over time, the consequences could eventually reach all the way down to startup fundraising.
What Founders Should Do Now
Founders should not change their current accredited investor screening based on the September 30 announcement.
These developments include proposed rules and requests for public comment. They are not equivalent to final rules expanding accredited investor eligibility. The SEC's rulemaking page identifies the September 30 investment-adviser and interval-fund measures as proposed, with comment periods running for 60 days following publication in the Federal Register.
For a company currently raising capital, the appropriate approach remains to:
Identify the securities exemption the company intends to rely upon before soliciting or accepting investments.
Determine whether the offering permits non-accredited investors.
Obtain appropriate investor representations and documentation.
Follow the applicable verification requirements where required.
Make the necessary federal and state securities filings.
Maintain accurate capitalization and corporate records for each issuance.
Most importantly, founders should not assume that a prospective investor qualifies merely because that person holds one of the credentials the SEC is now considering.
Unless and until the applicable qualification is formally adopted and effective, the existing accredited investor requirements continue to govern.
Why Founders Should Watch What Happens Next
The accredited investor definition determines access to a substantial portion of the U.S. private capital market.
Historically, financial thresholds have played a central role in determining which individuals may participate in many private offerings. The SEC's latest action continues a movement toward considering whether knowledge, experience, and professional sophistication should provide additional pathways.
For startup founders, that matters because investor eligibility directly affects the practical universe of people from whom a company may be able to raise capital under commonly used private-offering exemptions.
If the SEC ultimately recognizes additional credentials or creates an examination-based pathway, the potential accredited investor population could expand.
That would not eliminate securities regulation.
It could, however, give founders access to a broader group of legally eligible private-market investors.
And for an early-stage company trying to close its first $250,000, $500,000, or $1 million round, expanding the universe of eligible investors can be meaningful.
The Bottom Line
The SEC's September 30, 2026 actions do not mean that CPAs, CFAs, CFPs, Series 79 holders, Series 86/87 holders, or individuals who might eventually pass a new FINRA examination automatically qualify as accredited investors today.
The Commission is considering those additional pathways and seeking public input.
But founders should pay attention.
If the SEC ultimately expands accredited investor eligibility based on demonstrated sophistication rather than relying as heavily on wealth and income, startups could eventually have access to a broader pool of accredited investors for private capital raises.
For founders contemplating a friends-and-family, angel, pre-seed, or seed round, the development is another reminder that fundraising strategy and securities compliance should be planned together—not addressed after investors have already committed funds.
Planning a Private Capital Raise?
StartSmart Counsel advises startups and growing companies on private securities offerings, Regulation D, founder equity, convertible notes, capitalization, corporate governance, and securities compliance.
Before accepting investor funds, founders should understand which exemption applies, who may participate in the offering, what disclosures and investor documentation are required, and what federal and state filings may follow.
Contact StartSmart Counsel at 786.461.1617 for a consultation to explore your options.
This article is provided for general informational purposes only and does not constitute legal, investment, or tax advice. The SEC initiatives discussed above are proposals and matters under consideration as of October 2, 2026 and may change before any final action is taken.
