If you are an Institutional Investor, Venture Capitalist or an Individual Accredited Investor as defined by the SEC, there is no reason why you should not enroll in ACE-Net:

• For a nominal fee that covers the program's administrative costs, ACE-Net gives you unlimited access to view small business investment opportunities nationwide.
• It is completely up to you when you search the ACE-Net Company Database, when you contact a company you find, and how you arrange the investment to suit your lifestyle.
• ACE-Net is not a broker-dealer or an investment adviser, so you pay no brokerage fees or commissions.
• Using a secure website, ACE-Net protects your confidentiality as you search anonymously for ground-floor investment opportunities with growing companies.
• Complementing the new "small business capital gains" provisions of the Taxpayer Relief Act of 1997, ACE-Net allows you take advantage of tax benefits if you rollover your investment in a small company from another small company investment within 60 days.
• As a public-private partnership by federal-, state- and university-based entities, ACE-Net is especially helpful to special interest investors - particularly women and minorities - who seek to invest in specific markets.
• ACE-Net operates under the guidance of a "no-action" letter issued by the staff of the Securities and Exchange Commission (SEC).

Small businesses serve a critical role in promoting the American economy. ACE-Net was developed by the Office of Advocacy of the U.S. Small Business Administration as an effort to encourage the creation of a national marketplace for investors to find and invest in equity offerings by emerging, privately held small companies.

It was always known that private "angel" investors are very active in funding start up small companies, but research in this area was always scarce. And while some general estimates were available on the number of investors and the amounts they fund per year, very few people seemed to understand how angel networks really operated.

Thus, in 1995-96, the Office of Advocacy held a series of focus groups across the country with past and current angel investors, venture capitalists, entrepreneurs and securities regulators to study this market.

The results were astounding. The Office of Advocacy identified that:

• There is a critical gap in funding in the range of $250,000 to $5 million needed by small companies - amounts too high for bank loans but too low for large venture capital;
• There is a gap in the number of growing companies needing funding (350,000) and number that are actually funded (30,000);
• There is a gap in the number of accredited individual investors (1.5 to 2.5 million) and number of currently active investors (250,000); and
• There is a gap in networking based on geography - small companies outside of California and Massachusetts face more difficulty accessing investors.

Conclusion: There is not a shortage of deals or a shortage of accredited investors - just a shortage of ways for them to meet each other. ACE-Net is a direct response to the needs of the potential and current accredited investors who are interested in small, fast-growing companies. Using a password for confidential access, ACE-Net allows you to quickly search for these companies from a national database directly from the Internet. If you see an investment opportunity that interests you, it is up to you to directly contact the company.

ACE-Net's Internet system resides on a secure computer at California State University, San Bernardino. The database containing information about ACE-Net investors is strictly protected by the University, and is not available to any outside individual or organization, including the SBA or any other government agency.

ACE-Net operates under the guidance of a no-action letter issued by the staff of the U.S. Securities and Exchange Commission (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."

The letter also allows ACE-Net to charge an administrative fee to accredited investors for you to view a password-controlled list of small business investment opportunities. The maximum annual enrollment fee of $450 provides you with unlimited access to all ACE-Net services. Check with your local Network Operator for additional information on the fee.

The day-to-day operations of the program are managed by regional Network Operators that are nonprofit, university- or state-based entrepreneurial development centers. These Network Operators are established leaders in all aspects of economic development in their regions, and collectively, they have helped small businesses raise over $4 billion over the past few years to finance their growth.

If you are a new investor, the Network Operators can mentor you and provide training on issues relevant to your needs. The Network Operators also sponsor local forums where you can meet other investors, legal and financial professionals in your area, and you can possibly view potential investment opportunities together.

For certain institutional investors and venture funds, ACE-Net provides added ease when you search for small companies. The template used on the ACE-Net Company Database has been customized to allow the company information to be presented to you in the format that you are used to working with.