For those needing a definition, here is a Wikipedia entry on accredited investors. This quote is of interest "investors permitted to invest in certain types of higher risk investments including seed money, limited partnerships, hedge funds, private placements, and angel investor networks".
Since the investments are risky, due to limited information available (compared to say publicly traded stocks and funds), the reason is simple - to protect individuals who are not professionals from risking and loosing money (say life's savings) they really are not in a position to risk/loose. Note that primary residence doesn't count towards the minimum $1 million in in assets.
An accredited investor is someone who satisfies at least one of these conditions:
Some companies can also qualify as accredited investors, but the minimum-asset requirements are higher for them.
The reason for being accredited is simple: you assess an investment without a prospectus.
If you're not an accredited investor, the person taking your funds has a lot more legal paperwork to go through to ensure you understand the risks involved.