Investment Terms

An "accredited investor" as defined in Rule 501 (a) of Regulation D. This definition includes certain institutional investors and (a) any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1 million at the time of purchase; or (b) any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and who reasonably expects reaching the same income level or greater in the current year.

Angel Investors are traditionally successful business professionals looking for companies that exhibit high-growth prospects, have a synergy with their own business or compete in an industry in which they have succeeded. Angels often take a hands-on day to day management or consulting role in the company. Most importantly, Angel Investors can be an invaluable tool for connecting with future rounds of financing, building the executive team, and choosing potential business partners.

Like all investors, Angel Investors require an exit strategy. A company must be able to offer the Angel an exit in the form of an eventual public offering or from the sale of the company to a larger firm.

Private Placement is the offering and sale of any security by a brokerage firm not involving a public offering. Under the 1933 Act, private offerings are not the subject of a registration statement filed with the SEC. Private Placement offerings are issued by either the requirement of Sections 3(b) or 4(2) of the 1933 Act as described by the SEC interpretation.

Venture Capital is often referred to as an investment fund or partnership that focuses on investing in targeted companies. Venture Capital can be subdivided into startup or seed capital, second round financing, and development capital for established companies. In addition to supplying the necessary funding, a Venture Capitalist will provide the emerging company with assistance and expertise in business planning and industry knowledge. Typically, a Venture Capitalist has the goal of taking the company public. Keep in mind that Venture Capitalist's are not usually interested in small operations. Venture Capitalists are only interested in emerging companies that can grow very big and very fast.

Just as an Angel Investor requires an exit strategy, so too will the Venture Capitalist. A company must be able to offer the Venture Capitalist an exit in the form of an eventual public offering or from the sale of the company.