Below are answers to our most frequently asked questions. If you can't find the answer you're looking for, feel free to contact us.
Typically, when a company raises capital, it has to register its securities (basically the shares/interests that they are offering for sale). Registration is expensive and takes a long time. Most companies look for an exemption from registration. The most common exemption used by companies for this purpose is the private placement exemption, which basically meant the companies couldn’t publicly solicit or advertise. That makes it difficult to raise money.
The “Jumpstart Our Business Startups Act”, or the “JOBS Act” changed that. The JOBS Act allows companies to publicly solicit for funds and advertise while still conducting a private offering. However, it comes with a major catch. The only investors allowed to invest must be “accredited investors”, and the company raising money has to verify that their investors are truly accredited investors. A simple questionnaire is not sufficient – instead, companies must take further “reasonable steps” to prove their investors are accredited investors. Failure to comply is a violation of federal laws and may subject the company to enforcement action and the obligation to return money raised. That’s obviously bad for companies, but it’s also bad for investors who don’t know if the companies they invested in will suddenly have to return a portion of its capital to other disgruntled investors.
VerifyInvestor.com adopts best practices for verification because the penalties of noncompliance are so severe. Part of the verification process includes a review by a licensed attorney. We expect that most verifications will take one or two business days to complete, assuming, of course, that we are provided with all the necessary information to perform the verification review.
The documentation that is required depends on the type of accredited investor. After you’ve indicated to us what type of accredited investor you are, we’ll prompt you to upload certain documentation. For example, if you qualify by an income test, you may be prompted to upload a W2, K1, or 1099. Other types of accredited investors may have to upload an officer’s certificate or detail out their assets, and in the case of an individual qualifying under a net worth test, their liabilities as well. The reviewer of your file may ask you to upload additional evidence as appropriate. We recognize that this information may be highly sensitive and confidential. See our Security & Confidentiality section to understand how we protect your data.
The government understands that investments take time and that it could be frustrating to have to get verified repeatedly. On the other hand, the government also recognizes that an investor that qualifies as an accredited investor today may not qualify tomorrow. Accordingly, under federal law, the verifications are only good for three months. Our verification certificates will explicitly state the date that the verifications expire.
Yes, but you may consider having different accounts anyway for different investor profiles if you prefer to keep your affairs between various entities/businesses separate.
Here at VerifyInvestor.com, we consider the privacy of your confidential information one of our highest priorities. Our security measures include 128/256-bit data encryption, database encryption, DDOS protection, a system of firewalls, and regular vulnerability checks.
Encryption is a series of methods that privatizes your information that is stored in our databases and while it travels to and from our servers. 128/256-bit scrambles your data and ensures it is secure to the point where it's inaccessible to hackers without a specifically generated key.
VerifyInvestor.com's firewalls restrict access from external networks and even between connections internally. By default access is denied to everyone and is only ever allowed when needed by the company. Should access be allowed for maintenance, everything is carefully monitored.
We take three steps to protect our investor’s information. First, the site utilizes robust security protocols. Learn more about those here. Second, the site provides investors with the ability to hide the personally identifiable information on the documentation they upload. This helps ensure that even the reviewers will not see the certain highly sensitive information of the investor. Of course, if the reviewer needs to see what was redacted in order complete the verification, the reviewer may ask you to modify the redaction or explain what was redacted. Third, all reviews are conducted by a licensed attorney that is bound by ethical duties and professional responsibilities to keep the information confidential.
It can, but it’s a hassle and it’s risky. A company that fails to meet the minimum federal standard will not be legally compliant. If they are not legally compliant, it is a major threat to both the company and investor. See What is the "JOBS Act" and why does it matter? for more details. Use of VerifyInvestor.com automatically ensures legal compliance. Also, a company conducting its own review would have access to sensitive information about its investors. Investors might feel more comfortable if the company only knew that they were accredited investors without knowing their highly confidential financial information. Our site is designed with security in mind and will generally be safer than sending financials to a company. See Security & Confidentiality for additional details.
We are significantly better for many reasons. All of our verifications meet the minimum legal requirements prescribed by the Securities and Exchange Commission. For individual investors, we'll generally fall into two safe harbor guidelines that ensure use of our verification services meets minimum legal requirements. Many other third party reviewers might not conduct a legally compliant review. All of our verifications are performed by licensed attorneys that are experts in this specific area of law. Additionally, we have much better security and confidentiality than what most third parties, including attorneys and other licensed professionals, generally have. See Security & Confidentiality for more details. We’re also faster. In less time than it takes you to find a licensed professional (never mind formally engaging one with a written engagement letter), you’ll be done with VerifyInvestor.com. Lastly, we’re inexpensive.
An “accredited investor” is a type of investor. Generally, sales of securities must be registered with the SEC unless an exemption is found. Some of the exemptions require sales to be made to Accredited Investors, including STO Accredited Investor and ICO Accredited Investor. Our application lists out the various categories of accredited investor. The Securities and Exchange Commission also has a helpful page on accredited investors here: https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-accredited-investors
1. A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
2. Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000. For purposes of calculating net worth:
• The person's primary residence shall not be included as an asset;
• Indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
• Indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability.
3. A director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.
That’s very helpful. It’ll help you understand our workflow. Unfortunately, because of the new laws applicable to fundraising, your status as an accredited investor must now be verified for certain types of securities offerings. You can find out more about the new laws by clicking here: What is the "JOBS Act" and why does it matter?
Generate a statement from your cryptocurrency account or wallet ideally showing the account holder name and amount of holdings. Please also provide a link to a website that shows the value of the cryptocurrency in USD or provide a screenshot. The reviewer may ask for you to create a cryptographic proof of ownership by signing a message.
Unfortunately, you must go through our web application to complete the verification. The verifications are conducted by outside licensed attorneys, and the system must be used for your safety and protection. In addition, the system provides a complete audit trail.
If you have access to a scanner, you may scan that documentation into a PDF format. Alternatively, you can take a picture using your camera and save it into PNG or JPG format. It is not recommended to use the picture method if you have many pages to scan.
Unfortunately, under US federal laws, our reviewing attorneys will be unable to verify you as an accredited investor. In this case, you should cancel the verification request by logging into your account at VerifyInvestor.com, clicking the button to continue the verification, and then scrolling to the bottom whereby you click the link that to indicate that you are either not an accredited investor or have chosen to cancel the verification request. If someone else has requested verification of you, they are not informed that you are not an accredited investor, only that we were unable to verify that you were one. They receive the same message if an investor chooses to cancel the verification.
You may cancel the verification request by logging into your account at VerifyInvestor.com, clicking the button to continue the verification, and then scrolling to the bottom whereby you click the link that to indicate that you are either not an accredited investor or have chosen to cancel the verification request.
The Net Worth test requires that you have a net worth over $1 million, either alone or together with a spouse (excluding the value of your primary residence, but including liabilities exceeding the value of your primary residence and liabilities incurred on your primary residence within the last 60 days). To evidence your liabilities, you have to upload a consumer credit report. To evidence your assets, you would upload bank statements, brokerage statements and other statements of securities holdings, certificates of deposit, tax assessments and appraisal reports. All documentation must be no more than 90 days old. Note, that if you hold some assets through a company, then you would have to show the value of your ownership of that company instead (which may require you to show the value of the company or its assets).
The income test generally requires that you have income exceeding $200,000 USD in each of the two most recent years and a reasonable expectation of the same income level in the current year. Alternatively, you could try to qualify with the joint income of you and your spouse, if you have one. If your joint income with a spouse exceeds $300,000 USD for those years with a reasonable expectation of the same income level in the current year, then both you and your spouse would qualify as accredited investors. Evidence of the income should be supported by official tax records such as tax returns, W-2, K-1, 1099, or other government documents, if possible.
Unfortunately, this type of verification is one of the more complicated ones under law. A trust may be accredited if it has assets in excess of $5 million and its purchases are made by a sophisticated person. An entity, like an LLC, corporation, or LP may be accredited if it simply has assets in excess of $5 million. For the purposes of verification, a trust or entity cannot be formed for the specific purpose of acquiring the securities being offered. Typically, one would show the minimum assets by providing a bank statement or perhaps an appraisal of real estate held by the trust or entity.
If the trust or entity does not meet the minimum assets test, it might also be able to qualify as an accredited investor if all of its equity owners are accredited investors. This method of verification may be a bit complex, so if it applies to you, please feel free to contact us, and we’ll walk you through it.
Definitely! We built our system so that it could verify foreign investors and international accredited investors. We’ve processed verifications for foreigners all around the world. If you use our system and it seems to call for US specific documents, provide them if you have them, or use similar documents from your own country. If you have any questions, just contact us, and we’ll be happy to help you.
Definitely! We built our system so that it could verify all types of accredited investors, and we’ve processed verifications for all types of accredited investors. While you might not see a FAQ item relating to your category, rest assured that our web application can handle all categories of accredited investors. Our system should be easy to navigate, but if you have any questions, just contact us, and we’ll be happy to help you.
It's easy. From our homepage, click on the button that says "Verify Your Investors" to create an account. If you already have an account, just sign into your account using the "Sign In" link at the top-right of the homepage. Give us the email addresses of the investors you want to verify, and we'll take care of the rest. You'll get email updates as each verification is processed, and you can also track the status of all your verification requests through your dashboard. For more information, visit: https://www.verifyinvestor.com/how-to-verify-an-investor. If you have any questions, please contact us.
It's easy. From our homepage, click on the button that says "Verify Yourself" to create an account. If you already have an account, just sign into your account using the "Sign In" link at the top-right of the homepage and click on the "Order Self-Verification" button. For more information, visit: https://www.verifyinvestor.com/how-to-order-self-investor-verification. If you have any questions, please contact us.