Investor Qualification
Investor qualification is verifying whether an investor meets legal and policy requirements to invest in a specific offering.
Allocator relevance: A gating step—if qualification fails (accredited/qualified purchaser/KYC), allocation is impossible regardless of fit.
Expanded Definition
Qualification can refer to regulatory status (e.g., accredited investor, qualified purchaser), internal policy constraints (mandate, ERISA considerations), and onboarding requirements (KYC/AML, beneficial ownership). In private offerings, managers must confirm eligibility and document it. For allocators, qualification can also include operational readiness: ability to sign, fund capital calls, and comply with reporting and documentation requirements.
Qualification is not a formality—it is a compliance and execution constraint.
How It Works in Practice
Managers collect subscription documents, certifications, and supporting materials. Institutional allocators often have internal compliance reviews and may require side letter terms or reporting standards before approving.
Decision Authority and Governance
Compliance and legal often hold veto power in qualification. Governance defines who approves exceptions and how qualification evidence is stored and audited.
Common Misconceptions
- Qualification is automatic for large investors.
- It only matters at the end of the process.
- One qualification standard applies to all offerings.
Key Takeaways
- Qualification can block deals late—start early.
- Eligibility varies by offering and investor type.
- Documentation and process quality matter.