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QUESTION: What is the difference between an "accredited" investor giving a company money at a billion dollar valuation and just another regular person? If A16Z

by chirau 8y ago

QUESTION: What is the difference between an "accredited" investor giving a company money at a billion dollar valuation and just another regular person? If A16Z gives a company 100M at a 1B valuation, it becomes a unicorn. Does the same apply if my neighbor gives me 400M for 40% (1B valuation) of my company? Does that make my company a unicorn? If it does, what about if he gives me $1000 for 1 millionth of my company? Or maybe with 5 or 6 other investors bringing on their $1000 as well at the same valuation and adding validation? Whose valuation counts and why?

crooked-v 8y ago
"Accredited investor" in legal regulation terms is mostly a polite way to say "has enough money to not be permanently ruined if one of their big risky investments ends up in the hole". That is to say, if your neighbor has 40 million dollars in the first place, he almost certainly counts as "accredited", unless he's also got 50 million sitting around in liabilities.