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CSUSB

The Office for Technology Transfer and Commercialization at CSUSB

FREQUENTLY ASKED QUESTIONS
(GENERAL)

What is ACE-Net?

  • ACE-Net 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 ACE-Net?

  • Entrepreneurs with small, growing businesses can use ACE-Net 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 ACE-Net to find investment opportunities from across the nation.

Who Manages ACE-Net?

  • Overall management is provided by Phil Borden, Ph.D. and Jay Delong. Both have established reputations in high technology venturing, leading nonprofit organizations, incubation, investment, and economic development. You may contact them at:
    877/ANGEL79 (877/234-3579)
    18662 MacArthur Blvd, Suite 200, Irvine, CA 92612
  • 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 ACE-Net Different from Other Internet-Based Investment Programs?

  • ACE-Net operates under the guidance of a no-action letter issued by the SEC. The letter requires that all small companies listed on ACE-Net be "in full compliance with the appropriate filing and registration requirements of federal and state securities laws and regulations."
  • ACE-Net 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.
  • ACE-Net 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.
  • ACE-Net is not a broker-dealer, investment adviser, or a securities exchange, and therefore, there are no fees or commissions. ACE-Net charges a nominal fee to cover 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 ACE-Net.

Can Any Investor Enroll with ACE-Net?

  • Only "accredited" investors may enroll with ACE-Net.
  • 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 a bank, broker, dealer, insurance company, investment company, or SBIC.
  • The ACE-Net Investor Application requires investors to certify that they meet these criteria.

Can Any Entrepreneur Enroll with ACE-Net?

  • Only entrepreneurs who can sell security interest in their companies can enroll with ACE-Net.
  • This means corporations and limited liability companies (LLCs) may be listed on the ACE-Net Company Database.
  • The following business entities cannot list on ACE-Net: 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 ACE-Net Entrepreneur Application requires entrepreneurs to certify that their companies meet these criteria.

How Much Does it Cost to Enroll with ACE-Net?

  • ACE-Net is a fee-based service. At present, the maximum annual fee of $450 provides both the investor and entrepreneur with unlimited access to all ACE-Net services.
  • While the maximum that any ACE-Net Network Operator can charge is $450, some Network Operators are funded by states that compensate the fee for in-state investors or entrepreneurs.
  • Check with the local Network Operator for more information on fees and other services they may offer to the investor-entrepreneur community.

How Much Capital Can Be Raised Using ACE-Net?

  • A small, growing company can raise up to $5 million using ACE-Net. However, ACE-Net 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 has 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.

Do I Need a Lawyer to List on ACE-Net?

  • 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 ACE-Net can be prepared on your own, ACE-Net strongly encourages you to seek qualified legal professional assistance during every stage of securities offering.
  • Prior to listing on ACE-Net, 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.