How To Fund New-Energy

HOW TO FUND NEW-ENERGY

By Hal Fox

From: NEN, Vol. 6, No. 6, November 1998, pp. 1-2.

New Energy News (NEN) copyright 1998 by Fusion Information Center, Inc.
COPYING NOT ALLOWED without written permission.
ALL RIGHTS RESERVED.

HOW TO FUND NEW-ENERGY
By Hal Fox, Editor

In financial circles, an angel is a person of wealth who will provide quiet capital for the development of a good idea or an invention. The big problem is to find such an angel and this article will tell how and where to find angels.

Many years ago a small business could start a company, enlist the aid of a broker-dealer, and file to sell shares in a risky venture. All start-up companies are risky. Shares could be sold at ten cents a share, for example. Buyers knew that "penny stocks" were especially risky. This was especially true here in the Western U.S. where a lot of the penny stocks were mining stocks. However, on a few occasions, a penny stock did very well. The problem was that a lot of penny stock companies were scams. (So are some dollar stocks, of course.)

In their infinite wisdom to protect the investing public, the Securities Exchange Commission, together with NASDAQ, decided that a broker-dealer could not solicit his/her customer list to sell a penny stock. A penny stock was defined as a stock that sold for less than $5 a share. The end result was the end of the penny stock market and the end of a century or more of funding for small companies.

The Small Business Administration decided that something should be done to restore sources of funding for small businesses. The SBA funded several universities to establish the Angel Capital Electronic Network (ACENet). The SEC's regulations to protect the small investor makes an exception for millionaires. The SEC defines an accredited investor as a person whose net assets exceeds one million dollars or one who makes over $200,000 per year. (Formerly, there was also an exemption for education. Not now.)

Currently, an accredited investor can subscribe to the ACENet. A small company can fill out the proper forms, register with the SEC (under one of the exemptions) and offer its shares to the millionaires on the ACENet. This is done by applying to the nearest ACENet operator. Typically, the small business pays $450 to help cover the cost of this network service. The small business must also use its password and identification number to access the ACENet and upload its offering data. The SCOR (Small Corporation Offering Registration) Form U-7 is the acceptable format. For our registration, the form U-7 totaled 33 pages and took about ten hours to upload.

We highly recommend the ACENet to any group who has a worthwhile development that should be considered for funding. However, you will be expected to have put together a viable business -- not just have an idea. You will need to have a qualified Chief Executive Officer, a qualified Chief Financial Officer, have a corporate structure that has already developed a product to the stage where an angel would be willing to invest. Also, and very important, you must show that you know how to market such a product. If all you have is an idea, you are not ready for the ACENet. You must either fund the development yourself or with a group of friends.

If you have friends who qualify as accredited investors, tell them about the ACENet. You can access the ACENet on the internet at webpage . There is information and forms that can be downloaded. Operator addresses and phone numbers are also provided. Currently, there are about 700 accredited investors who are ACENet members. There are about 40 projects currently listed on the ACENet entrepreneur database. However, there are an estimated 250,000 accredited investors in the U.S. Someone needs to tell 243,000 accredited investors about the ACENet. It is estimated that these investors spend about $20 billion a year to fund about 30,000 new businesses.

Trenergy, Inc. and X Out Corporation have organized a company, Nu OmniComm Technologies, to engineer and develop a new product for audio-content and video-content control of programs viewed through the family television. This device (called the FG-Chip for Family Gatekeepers Chip) mutes offensive words and scrambles offensive screens under user control. Nu OmniComm Technologies is offering its shares through the ACENet. Trenergy expects to be able to obtain profits from its share of Nu OmniComm to help fund Trenergy's new-energy developments.

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