Thread by @andrew__rea

International Investors & Accredited Investor Status

I wrote a thread on accredited investor regulations & the Series 65.

For International Investors Investing in US startups, this thread is for you.

https://twitter.com/andrew__rea/status/1392978563998044161

First off, traditional accredited investor regulations for US citizens also apply to international investors.

https://twitter.com/andrew__rea/status/1392978565415702529

If you don't meet these criteria, there are 2 main side doors available to you.

1. Regulation S Securities Placements

2. The Series 65

1. Regulations S

First, we need to distinguish between Regulation D & Regulation S financings.

Reg D is the SEC regulation governing private securities placements.

Virtually all US startups raise funding under this regulation.

Reg S is an SEC-compliant side door for US companies to raise capital from international investors, similarly to Reg D.

The primary difference between Reg S & Reg D is that the international investors investing via Reg S can be of any wealth level, meaning they don't have to be accredited.

US companies can raise financing through both Reg D & Reg S simultaneously, assuming that they don't share the terms of the international Reg S offering with US investors.

That said, most early-stage US startups are raising through Reg D only. Therefore, this side door is probably locked in most cases.

2. The Series 65 (for international investors)

https://twitter.com/andrew__rea/status/1392978571241693188

You don't have to be a US citizen to take the Series 65. However, you do still have to ensure you're in "good standing." This means registering as an IAR.

https://twitter.com/andrew__rea/status/1392978576690012161

As a foreign citizen seeking to register as a foreign investment advisor, the following are the main options. ⬇️

- The Foreign Private Adviser Exemption

- Register as a Foreign Investment Adviser directly with the SEC

The Foreign Private Adviser Exemption:

According to the SEC, you qualify as a foreign private adviser if you meet the following criteria. 👇

Registering as a Foreign Investment Advisor directly with the SEC:

As a foreign citizen, instead of registering with the state, you'd need to register directly with the SEC.

This can get pretty complex. I'd reach out to a lawyer or consultant that can help you with the process.

This paper does a good job of outlining the many details of registering as a foreign advisor in the US.

prfirmpwwwcdn0001.azureedge.net/prfirmstgacctp…

TL;DR - International investors have 2 primary side doors to accredited investor status.

1. Invest in US-companies through Reg S
2. Pass the Series 65 & be recognized as an Investment Advisor through the Foreign Private Adviser Exemption or by registering directly with the SEC.

Note:

All the information in this thread is specific to foreign investor accreditation in the US and investing in US-domiciled companies. Information regarding accreditation in other countries and/or investing in non-US domiciled companies is not covered in this thread.

Finally, International Investor regulations are more complicated than those for standard US investors. I'm not a lawyer and this is not legal or investment advice. Double-check the sources I shared and if necessary check with legal counsel. Wish this stuff was more simple. 🤷🏼‍♂️

I'm simply interpreting the regulations in plain English to the best of my understanding. Hope it helps on some level.