Ace In The Hole

Big Business

The importance of ACE-Net cannot be underestimated. Bibbens says the most popular estimate of the amount of equity capital America's emerging new enterprises need is on the order of $60 billion each year. While angels are capable of making a sizable dent in this need, time and place constraints such as those faced by Meltzer, to say nothing of the regulatory barriers, have until now kept entrepreneurs
from easily tapping angels' resources.

The reason for the problem comes down to just one word: efficiency. Among brokers, traders and professional investors, this term has a precise meaning. Specifically, it refers to the speed and proficiency with which information is disseminated. The more efficient a market is, the theory goes, the more buyers and sellers are attracted to it because they can make investment decisions based on knowledge of all relevant facts that are available.

Under this definition, it's also easy to see just how inefficient the market is for private capital. Distributing information among private investors is difficult. There's no uniformity. Buyers and sellers have wildly diverse agendas.

And this is precisely where ACE-Net can make such a fundamentally important mark: It dramatically increases the efficiency of information distribution. In fact, within the strictest constructs of the discipline, ACE-Net mirrors the mechanisms of any stock market by matching buyers and sellers with uniform information. When this happens, capital flows more freely.

For entrepreneurs like Ed Meltzer, that's certainly the expectation: "My hope is that 30 days after going up on ACE-Net we will be fully funded."

For more information on ACE-Net, visit (http://www.sbaonline.sba.gov) or (http://ace-net.unh.edu)., or contact Jere Glover, Chief Counsel of the SBA's Office of Advocacy, at (202) 205-6533 or (202) 205-6928 (fax).

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This article was originally published in the May 1997 print edition of Entrepreneur with the headline: Ace In The Hole.

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