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A critical problem is faced by growing U.S. companies. While many are able to raise up to $250,000 through family, friends and founders, they face significant difficulties finding capital as they move into the next rounds of financing in which they are seeking between $250,000 and $5 million.
In the past, some of this financing had been provided by the venture capital industry. However, because the venture capital industry is now attracting large institutional investors, the size of the average venture financing deal has grown to approximately $6.5 million. In addition, sources of venture capital are concentrated in and mostly limited to a few regions of the country, including Silicon Valley in northern California and Route 128 near Boston, Mass. Annually fewer than 3,000 firms receive venture capital.
Helping to fill the gap for the majority of America's growth companies seeking relatively modest early-stage funding is the Angel Capital Electronic Network (ACE-Net), a nationwide Internet-based listing service that provides information to "angel" investors on dynamic, growing businesses seeking $250,000 to $5 million in equity financing. It allows angel investors to view the securities offerings of small, growing companies.
Until ACE-Net, there had been...