Basic Information

If you are like most successful entrepreneurs, your company's cash reserve is not keeping up with your growth. And your company's growth has surpassed - or is about to surpass - the amount that friends and family, credit cards, and bank or other borrowing can provide. You probably need in the range of $250,000 to $5 million. You face a challenge in deciding among your options.

The SEC demands that if you intend to raise funds from people with whom you have had no prior relationship, your must register your offering with them - a daunting process. The regulatory body of your state probably has additional rules for you to obey, driving up the time, complexity, and cost of compliance even more.

You may choose to obey the SEC and state securities rules or to ignore them in the hopes they do not apply in your case. If you take the path of just selling stock privately without registering, you risk creating an investment that creates the right of any investor to demand his/her money back in full, with interest. And worse, you also invite potential civil and criminal sanctions from regulators tasked with protecting the rights of investors. If this is the first of several rounds of projected financing, you also risk having all future offerings poisoned for formal investors.

Should you choose to register the offering with the SEC, you will undertake a complex SEC registration process costing from tens to hundreds of thousands of dollars in attorney, accounting, and other fees. You probably will have to register your offering in each state in which you sell stock also, incurring other fees.

Or, you may list on Active Capital, use an attorney to scan your completed application. If so, you will secure one of several exemptions from SEC registration procedures while advertising nationally, at a fraction of the cost and time required to do so in any other way.

ACE-Net gained the right to offer this exemption by obtaining a "No-Action Letter" issued by the staff of the U.S. Securities and Exchange Commission. The entire SEC letter and the corresponding letter from the Office of Advocacy, U.S. Small Business Administration, are posted here.

Under "Securities Law Issues," you will find information on what federal and state securities laws apply to listing small company securities offering on ACE-Net. Recent regulatory innovations, such as the recently adopted Model Accredited Investor Exemption of the North American Securities Administrators Association, are highlighted. You can read the exemption itself as well as a press release and other information regarding this new provision, and find out how it works with ACE-Net.

Under "Tax Law Issues," you will find the latest developments in tax laws that affect the investor community.

For your convenience, we have also included some sample "Model Terms and Conditions" for small company financing, that were developed specifically for ACE-Net by expert attorneys.

For further information about Active Capital and its membership benefits, please see FAQs