The global venture capital industry is experiencing a dramatic shift as participation from non-traditional players (i.e., non-institutional fund investors), such as family offices and high-net-worth individuals, continues to grow. However, raising capital from overseas investors remains complex and costly due to differing regulatory frameworks across jurisdictions. In most countries, investors must satisfy accredited or qualified investor criteria, or similar regulatory standards, in order to invest in offshore funds. Failure to meet such regulatory requirements can expose fund managers to potentially severe risks and legal consequences, including regulatory fines, restrictions on future fundraising, and reputational damage.
Many countries allow funds to be marketed through private placements without a full offering prospectus or fund registration with regulatory agencies if the offer is restricted to certain types of sophisticated or high-net-worth investors, as they are considered capable of evaluating investment risks without full regulatory protections. Nevertheless, fund managers must be cautious and seek legal advice to ensure compliance with the relevant regulations in both their home country and the jurisdictions of their investors. For example, certain jurisdictions may even require offshore investment funds to partner with local licensed agents to legally raise capital.
Non-Institutional Investor Guidelines
The below table provides an informational overview of HNWI requirements for offshore private funds in selected countries across different regions.
| Country | Applicable Regulation | Investor Requirements |
|---|---|---|
| United States | SEC Rule 501 of Regulation D | An individual can qualify as an accredited investor by passing one of the following tests:
|
| Canada | National Instrument 45-106 Prospectus Exemptions (NI 45-106) | An individual is an accredited investor if the individual satisfies one of the following tests:
|
| Mexico | Securities Market Law (LMV) Article 2 | A basic qualified investor is a person who has held, on average, during the last year, investments in securities for at least 1,500,000 investment units (approximately US$700,000 as of the date of this article) or who obtained in each of the last two years, annual income of at least 500,000 investment units (approximately US$230,000). |
| Australia | Corporations Act 2001 | An investor is deemed to be a Sophisticated Investor where the person:
Further, a person who has or controls gross assets of AUD 10 million (including any assets held by an associate or under a trust that that person manages) is deemed to be a Sophisticated Investor
no matter what the size of its investment. |
| South Africa | South African Companies Act 71 of 2008 (effective 2011) | A sophisticated or qualified investor in South Africa is defined as one with assets ≥ ZAR 1 million and either has the requisite knowledge/ experience or is advised by a licensed financial advisor. |
| Singapore | Securities and Futures Act 2001 | An individual will qualify as an Accredited Investor if they meet at least one of the following criteria:
|
| Switzerland | Swiss Federal Collective Investment Schemes Act (CISA) Article 10 | Qualified investors include individuals who can confirm in writing they directly or indirectly have net financial investments (e.g. bank assets, securities, derivatives) of at least CHF 2 million. |
| United Arab Emirates | Securities and Commodities Authority Rulebook (Resolution No. 13 of 2021) | Foreign funds may only be marketed in the UAE on a private placement basis to Professional Investors. A Professional Investor is a natural person who meets one of the following requirements:
|
Conclusion
Successfully attracting foreign investors requires navigating different regulatory landscapes, particularly by understanding the accredited or qualified investor requirements that apply in each jurisdiction. While some countries maintain relatively flexible eligibility criteria for offshore investors, others enforce significantly stricter thresholds that both fund managers and their investors must satisfy. Understanding regulatory requirements relevant to your fund’s investors is essential for building a compliant and effective fundraising strategy that unlocks the potential of overseas investment capital.
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