How to become an accredited investor for biotechnology startups
Biotechnology startups have the potential to revolutionize the health industry, but finding steady funding could be an issue. This is where accredited investors come in. An accredited investor is an individual, bank, or company that meets net worth and professional criteria, which enables them to back eligible, growing companies.
What are biotechnology startups?
Biotechnology startups are new and emerging projects or companies that create and develop technology that aims to solve issues involving human biology. These firms focus on a variety of areas, like finding new ways to treat diseases or developing drugs.
Like most startups, biotech startups have many expenses to cover. Lab space, equipment, medical consumables, contracts, and salaries are a few of the many things the founders have to take into account when starting a company specializing in life science.
Numerous biotech businesses are flourishing throughout the world. Using a biotech directory, you can search for biotech companies with active employers and business activities.
As of now, many biotechnology companies that are part of the top biotech companies listings, such as Johnson & Johnson and Pfizer, have dominated the health industry. They continue to thrive in the market along with biotech groups that are under much larger pharmaceutical companies.
How do I become an accredited investor in biotechnology startups?
The accredited investor definition and role dictate the list of likely investors and eligibility to invest for companies that aim to raise their initial capital. Many investors are limited to part take in financing due to the existing exemptions under federal security laws.
To become an accredited investor in biotechnology startups or any startup company, you must reach certain net worth and professional requirements and criteria.
The net worth criteria for a natural person or individual are as follows:
- Must have a net worth that exceeds $1 million either as a person or together with the spouse (The value of the person’s primary residence is excluded)
- Has an earned income over $200,000, or $300,000 along with spouse, in the past two years and expects the same earnings in the current year
- Has a financial professional license that are professional certifications and designations for professionals in the investment field
Other than net worth, you must also have professional criteria met:
- Must have any family client from a family office that can qualify as an accredited investor
- Must have “knowledgeable employees” such as directors, executive officers, and trustees in private funds used for investments
Why become an accredited investor in biotechnology startups?
Biotechnology startups are highly profitable now that producing therapies and cures for diseases like diabetes and Alzheimer’s are needed to increase life expectancy. Investing in biotech companies has the potential to:
- Turn research into a prominent change in the world
- Improve the efficiency needed for creating products
- Provide biotech investors with significant returns
It is important to note that many startups can fail. You might lose the money you invested, so it is necessary to invest in startups that you truly think have the potential to succeed or grow into a successful company.
Accredited investors are people or companies who have the funds and capabilities to support biotechnology startups financially. Right now, investing in emerging biotech startups has the potential to change the health industry and allow accredited investors to get their money’s worth. There are many specific net worth criteria and professional requirements that need to be met before qualifying as one.
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