The Angel Capital Electronic Network
www.sba.gov/advo
ACE-Net is an Internet-based securities-listing service. It is a dynamic, interactive response to the expressed needs of small business entrepreneurs, angel investors, accountants and securities attorneys.
ACE-Net provides an unprecedented opportunity for entrepreneurs
seeking equity financing in the range typically too low to attract
most venture capitalists -- $250,000 to $3 million. It enables
entrepreneurs to reach accredited investors (called "angels")
with a net worth exceeding $1 million or annual income greater
than $200,000. Angels want to invest in a company by purchasing
shares of stock and often want to share their vast business expertise.
ACE-Net allows angels to search for companies from around
the country that are listed on the system without giving up their
own privacy. The uniform disclosure document required of all companies
on the system makes it easier for accountants of entrepreneurs
and angel investors alike to submit and retrieve information.
Additionally, ACE-Net permits companies listing offering
materials on the system to take advantage of several federal and
state securities exemptions. These exemptions can significantly
reduce the cost of a security offering without adversely affecting
critical investor protections.
ACE-Net transforms what was the informal angel investment community into a nation-
wide system for entrepreneurs and investors to meet. The program is a public/private
partnership between not-for-profit local network operators (typically
university- or state-based entrepreneurial development centers)
and the U.S. Small Business Administration's Office of Advocacy.
ACE-Net for Entrepreneurs
If you are an entrepreneur looking for equity dollars, ACE-Net
can provide you with an expanded opportunity to offer securities
to private investors. Using the technology of the Internet, the
network creates an electronic list of corporate offerings from
small firms around the country. This costs less than traditional
private placement offerings and saves time due to a streamlined
process that has already been approved by federal and many state
securities regulators.
ACE-Net provides the busy entrepreneur with "one-stop shopping" for information,
24 hours a day, 7 days a week, 52 weeks a year. You can learn
about conferences, meetings and programs of interest as well as
important legislative information, rules, terms and conditions
affecting the entrepreneurial investment community.
In addition, the ACE-Net web site provides disclosure documents recognized by 48 states that entrepreneurs can complete with a minimum of expert support. Using ACE-Net,
you can sell stock in a growing number of states without preregistering
with those states. You file and pay fees only after you secure
the capital.
ACE-Net for Angel Investors
As an angel, you recognize the worth of a good investment; you
also value your privacy. ACE-Net uses the highest security-encryption
software permitted to provide you with full anonymity while you
search for investment opportunities. The entrepreneur will not
be aware of your interest until you contact the company directly.
Not only has ACE-Net reduced the paperwork and regulatory
burdens encountered during traditional private placement investments,
it also takes advantage of the new efficiencies provided by the
Internet. Using ACE-Net's search engine and e-mail systems,
you can quickly search for specific types of businesses, markets,
investment amounts, geographic locations and other characteristics
of the businesses. In addition, any company that newly joins ACE-Net
and meets your investment criteria will automatically activate
the sending of an e-mail to you.
Today, about 250,000 angels invest $20 billion annually in approximately
30,000 small firms. Estimates suggest that five to 10 times as
many individuals have the wealth, entrepreneurial experience and
interest in becoming angel investors. Until ACE-Net, there
was no nationwide, centralized listing service identifying small,
dynamic, growing companies for angels to investigate and examine.
ACE-Net for Accountants and Securities Attorneys
Companies thinking of joining ACE-Net need the advice of
securities attorneys and accountants to assist them in the preparation
of their offerings and business plans. Designed in response to
your recommendations, ACE-Net provides educational programs
to help new entrepreneurs and angel investors better understand
the issues they need to discuss with their attorneys and accountants.
ACE-Net operates under a no-action letter the Securities
and Exchange Commission issued on October 25, 1996. Companies
listed on ACE-Net can utilize the SEC's revised small business
exemptions (under Regulation A and Regulation D, Rule 504) and
recently adopted state securities small business exemptions. In
April 1997, the North American Securities Administrators Association
(NASAA) adopted a Model Accredited Investor Exemption for stock
offerings to accredited investors. In states that have adopted
the model language, ACE-Net companies have minimal regulatory
burdens. With the revised exemptions from the SEC and NASAA, a
growing number of both law and accounting firms see ACE-Net as
an effective and efficient way of helping entrepreneurs and angels
attain their goals and fulfill their dreams.
For more information about the SEC no-action letter, visit the
ACE-Net web site through the SBA's Office of Advocacy:
www.sba.gov/advo. Some of the details you will find on
the ACE-Net web site include -
ACE-Net Network Operators
The network operators are not-for-profit organizations with years of experience helping entrepreneurs and investors. With ACE-Net, they are expanding this important service to a national audience. You can find a list of the network operators on the ACE-Net web site, accessed through www.sba.gov/advo. Once
you are in the Ace-Net home page, click on Subscription
Information and then Investor Enrollment or Entrepreneur Enrollment.
Resources for the Investor and Entrepreneur
For More Information
Information is power. Make it your business to know what is available, where to get it and, most importantly, how to use it. Sources of information include:
The U.S. Securities and Exchange Commission
North American Securities Administrators Association
U.S. Small Business Administration
* Inquire at your local SBA office as to availability.
The SBA has offices located throughout the United States. For the one nearest you, look under "U.S. Government" in your telephone directory, or call the SBA Answer Desk at
1-800-U-ASK-SBA. To send a fax to the SBA, dial (202) 205-7064.
For the hearing impaired, the TDD number is (704) 344-6640. For
information on your rights to regulatory fairness, the telephone
number is 1-800-REG-FAIR.
To access the agency's electronic public information services, you may contact:
SBA OnLine: electronic bulletin board (modem and computer required)
Internet: using uniform resource locators (URLs)
You may also request a free copy of The Resource Directory
for Small Business Management, a listing of for-sale publications
and videotapes, from your local SBA office or the SBA Answer Desk.
All of the SBA's programs and services are provided to the
public on a nondiscriminatory basis.
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