Frequently Asked Questions

What Is Active Capital?
Who Needs Active Capital?
Who Manages Active Capital?
How Is Active Capital Different From Other Internet-Based Investment Programs?
Can Any Investor Enroll With Active Capital?
Can Any Entrepreneur Enroll With Active Capital?
How Much Does It Cost to Enroll With Active Capital?
How Do Active Capital Fees Compare To “Go It Alone” Costs?
How Much Capital Can Be Raised Using Active Capital?
How Much Does Active Capital Itself Lend Or Invest?
Do I Need a Lawyer To List On Active Capital?
After I Have Filled Out All My Forms, May I Change My Answers?
Must I Notify Active Capital After I Have “Made A Deal”?
Can I Use Active Capital If I Am A Canadian Or Other “Non-U.S.” Company?
Can I Get Other Forms Of Non-Equity Financing Through Active Capital?
How Do I Learn When Potential Investors Read My Plan?
How Many Investors May Review My Plan?
Do All Investors Demand To Play A Role In Each Company?
How Can Lawyers Or Accountants Or Consultants Register On Active Capital?
Can I Register On Active Capital If I Have Filed For A Public Stock Offering With The SEC Or Have Not “Blue Skyed” In Every State In Which I Am Seeking Investment?

What Is Active Capital?
Active Capital is the simple, secure and low-cost way for investors and small companies to find each other. It is an Internet-based listing service for securities offerings of small, growing companies located throughout the nation, that are viewed anonymously by accredited investors.

Who Needs Active Capital?
Entrepreneurs with small, growing businesses can use Active Capital to attract equity investors while meeting the legal requirements of federal and state securities regulators.

Venture capitalists, institutional investors and individual accredited investors can use Active Capital to find investment opportunities from across the nation.

Who Manages Active Capital?
Overall management is provided by Phil Borden, Ph.D.. He has established reputations in high technology venturing, leading nonprofit organizations, incubation, investment, and economic development.

The day-to-day operations are managed by regional nonprofit, university-, or state-based entrepreneurial development centers called Network Operators. They are established leaders in all aspects of economic development in their regions.

How Is Active Capital Different From Other Internet-Based Investment Programs?
Active Capital operates under the guidance of a no-action letter issued by the SEC. The letter requires that all small companies listed on Active Capital be "in full compliance with the appropriate filing and registration requirements of federal and state securities laws and regulations."

Active Capital has also consulted with the North American Securities Administrators Association, Inc. (NASAA), the national organization made up of every state securities regulator that is devoted to investor protection. Its listings are cleared with NASAA.

Active Capital is a not-for-profit listing service that is designed to facilitate the flow of information between entrepreneurs and investors. It is not designed to be a source of clients or business for attorneys, consultants, brokers, dealers, or any others who charge fees for services to entrepreneurs or investors.

Active Capital is not a broker-dealer, investment adviser, or a securities exchange, and therefore, there are no “success fees” or commissions. Active Capital charges a nominal fee to cover its administrative costs, but this fee is in no way contingent or related in any manner to the outcome or completion of any transaction resulting from a company's listing on Active Capital.

Can Any Investor Enroll With Active Capital?
Only "accredited" investors may enroll with Active Capital.

SEC defines an individual accredited investor as a person with over a $1 million in assets or whose income is at least $200,000 ($300,000 jointly with a spouse).

SEC defines an institutional accredited investor to include several types of financial institutions such as bank, broker, dealer, insurance company, investment company, or SBIC.

The Active Capital Investor Application requires investors to certify that they meet these criteria.

Can Any Entrepreneur Enroll With Active Capital?
Only entrepreneurs who can sell security interest in their companies can enroll with Active Capital.

This means corporations and limited liability companies (LLCs) may be listed on the Active Capital Company Database.

The following business entities cannot list on Active Capital: sole proprietorships, general or limited partnerships, joint ventures, "blank check" or development stage companies, or those involved in oil, gas or other extractive interests.

The Active Capital Entrepreneur Application requires entrepreneurs to certify that their companies meet this criteria.

How Much Does It Cost to Enroll With Active Capital?
Active Capital is a fee-based service. The fee for entrepreneurs is $199 for a 6 month membership. At this time there is no membership fee for investors.

How Do Active Capital Fees Compare To “Go It Alone” Costs?
Active Capital is far less expensive. The single fee provides a registration exemption in almost every state and with the SEC. Going it alone and staying in compliance with federal and state regulations requires registering in each state in which an offer will be made, plus such other fees as attorneys, broker-dealers, and others may assess for the registration process.

Such fees are routinely estimated at $15,000-30,000 per state, though it may vary according to the attorney, state, or other expert. It is wise to have an attorney or other expert look over an Active Capital filing, but that review typically will be less than $2,000 and may not be necessary at all. Entrepreneurs should consult their local attorneys and experts to verify the specific information for each specific case.

How Much Capital Can Be Raised Using Active Capital?
A small, growing company can raise up to $5 million using Active Capital. However, Active Capital is especially helpful for companies seeking up to $1 million in financing.

Entrepreneurs can raise up to $1 million without having to register their securities offering under the SEC's Regulation D, Rule 504, and by taking advantage of the Model Accredited Investor Exemption or similar state variation that have been adopted by a majority of states.

Entrepreneurs can also raise up to $1 million under the SEC's Regulation D, Rule 504, by listing their securities offering registered with states.

Entrepreneurs can also raise up to $5 million under the SEC's Regulation A, by listing their securities offering registered with states.

How Much Does Active Capital Itself Lend Or Invest?
Nothing. Active Capital is not a lender or investor. It works with entrepreneurs and investors to voluntarily link both, so that they may work with each other.

Do I Need a Lawyer To List On Active Capital?
Offering corporate securities for sale involves significant responsibilities under both federal and state securities laws. Therefore, while most of the documents required for listing on Active Capital can be prepared on your own, Active Capital strongly encourages you to seek qualified legal professional assistance during every stage of securities offering.

Prior to listing on Active Capital, you are also urged to work with an attorney to develop a comprehensive securities law compliance plan specific to your proposed offering.

It is critical that you comply with all legal requirements as any mistake you make will not only lead to serious liability, but can also affect your ability to obtain further equity financing later.

After I Have Filled Out All My Forms, May I Change My Answers?
Yes. Companies evolve, projections change, and counselors and investors make suggestions worth considering. You may change your profile as long as your membership is still active. However, each time you do, you must resubmit a new application, sign, date, and submit a new hard copy. Please contact Active Capital's Network Operator to transfer membership to the new application.

This process protects both investors and entrepreneurs. It protects investors by making certain that the plan that may lead to an offer has not changed without notice, and it protects both parties from lawsuits about the accuracy of the information in a particular offering.

Must I Notify Active Capital After I Have “Made A Deal”?
No, but we'd sure love it. SEC regulations keep us from advertising the “success stories” of individual companies, but we aggregate the data in order to know what we can do better and how to design more effective help.

Can I Use Active Capital If I Am A Canadian Or Other “Non-U.S.” Company?
At present Active Capital only works with U.S. companies, because all of its securities regulations clearances are U.S. based. However, if a non-U.S. company wishes to list for purposes of seeking investors but understands that it has none of the “safe harbors” listed above, it may do so.

Can I Get Other Forms Of Non-Equity Financing Through Active Capital?
No. Active Capital listings all are based on investors taking an equity (ownership) position in the company.

However, Active Capital is working on relationships with non-equity capital providers, eg. term loans, revolving loans, leases, etc. Watch the site for links.

How Do I Learn When Potential Investors Read My Plan?
When the investor contacts you. One of the values of Active Capital is the security we provide both investors and entrepreneurs.

While we cannot provide you with a detailed list of investors who have seen your plan, your Local Operator can let you know how many “hits” your plan has received monthly. It will be a rough guide to the degree of interest in your company.

How Many Investors May Review My Plan?
Up to the total number in the investor database. Of course, it is unreasonable to think every investor will be interested. Investors' interests will be dictated by the field of interest of the company, the type of business it is, the region of the country in which it is located, the maturity of the company, the experience of the CEO, etc. Although angel investors typically like to invest early in the evolution of a company, an investor may take an interest in any level of maturity or business type. It is impossible to predict what will “turn on” a particular investor.

Therefore, the Active Capital database creates a company profile based on each answer within the U-7. Each answer is searchable by investors. Investors look for matches with their interests, then pursue them as they please.

Do All Investors Demand To Play A Role In Each Company?
A “qualified no.” Angels like to be active investors. However, each situation is different. How active an angel will be depends on both what the investor is looking for and the level of maturity of the company.

If the company has a management or marketing or other weakness in which the angel can offer experience, the angel may do so on a voluntary basis or as a condition of the investment. If the angel is interested only in return, the angel may take a very light role. One thing an entrepreneur can count on is that any investor will do very careful due diligence before investing and will create a investment and active management strategies based on what is discovered.

How Can Lawyers Or Accountants Or Consultants Register On Active Capital?
They cannot register as an entity. Active Capital is not designed as a source of business for them. Only companies and investors may register on Active Capital. If a registering company chooses to have an attorney or accountant or consultant act on its behalf, it may do so by having the outside expert sign off on the submission form.

If an attorney or accountant or consultant wishes to register as an accredited investor, or as a local operator, Active Capital will investigate their application and act accordingly.

Can I Register On Active Capital If I Have Filed For A Public Stock Offering With The SEC Or Have Not “Blue Skyed” In Every State In Which I Am Seeking Investment?
Yes to both questions. The whole idea of Active Capital is to save you the separate filing fees in the various states. We take care of “blue skying” for you. If the states in which you file subscribe to the Model Accredited Investor Exemption (MAIE), which our original company, ACE-Net helped to develop, then a single filing on Active Capital exempts you from state filing fees. 48 states either subscribe to MAIE or have laws that harmonize with it while not using it specifically.

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