How to Become an Accredited Investor
EquityNet Blog » Angel Investing
by Judd Hollas
4M ago
We’ve all heard the phrase, it takes money to make money, but to rephrase it in terms that accredited investors would understand, we must make an appendage: it takes money to make money in unregistered offerings.  This is because accredited investors have access to investment offerings and opportunities that most people do not, even those who earn above-average incomes and have respectable net worths.  In this article, we discuss who is eligible to invest in unregistered securities and how the Securities and Exchange Commission (SEC) has moved the bar over the years for becoming an ..read more
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Common Stock vs. Preferred Stock: Understand The Differences
EquityNet Blog » Angel Investing
by Judd Hollas
1y ago
All corporations, whether public or private, have shares of stock. Each share carries a price, whether established by the market (investors) or approximated by the company itself (pre-money valuation), that when combined, represent 100% of the company’s equity.  When one buys a share of stock, they are buying a sliver of equity ownership in the company. The type of stock they purchase will dictate if and when they have rights to distributions of money and votes on corporate actions. In this article, we cover what each form of ownership is (common stock vs. preferred stock) and how they d ..read more
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What is a Tender Offer? Definition & How They Work
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
The words “Hostile Takeover” in the headline of a business publication are sure to generate a substantial amount of reader interest. Many storylines, fiction and non-fiction, paint a hostile takeover as the death knell for a company. While it makes for interesting reading, it’s important to know that a “tender offer” is at the heart of every takeover, friendly or not. This article will look at what a tender offer is, how it works, its advantages and disadvantages, regulations associated with tender offers, and more. Whether you intend to buy or sell shares related to a takeover, this article ..read more
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What is an Angel Investor? Definition and Overview
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
Angel investing is a unique investment option where high net-worth individuals provide businesses with necessary funding in exchange for equity in the business. People seek out angel investment opportunities because of the higher-than-average potential returns. Angel investors invest in both mature companies and start-ups alike. A recent study shows that the average business that seeks out angel investors is 6 years old. Companies seek out angels because it allows them to connect with public investors while remaining a privately-held company. Instead of receiving just a share of stock or a qu ..read more
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Cost of Equity Formula Using DDM, CAPM, and Private Companies
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
From a company’s perspective, there are two methods for raising capital: debt and equity. Debt is usually less expensive than equity because the debtholder’s returns are fixed and finite. You can also deduct interest expenses from your tax burden, which is an advantage of using debt financing.  But there are many reasons a company would want to raise equity capital and therefore must understand their cost of equity. Investors will also likely conduct a similar analysis for different reasons, but it’s good to align cost of equity expectations.  Cost of equity means different things f ..read more
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How to Invest in Pre-IPOs & How They Work
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
“Getting in on the ground floor” is the dream of just about every investor who has heard of the fortunes amassed by early investors in Apple and Amazon. Because of that, the average retail investor shows a keen interest in Initial Public Offerings (IPOs). However, one step ahead of them are those who invest in pre-IPOs. Often, companies issuing pre-IPO stock never make it to the IPO stage, and those investors who bought pre-IPO shares of those companies don’t realize the return they had hoped for. Still, there can be pronounced financial benefits, such as exponential returns on their investme ..read more
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How To Set Up a Self-Directed IRA in Five Steps
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
Maybe you’ve had your standard individual retirement account (IRA) for some time. But do you want to make more unique investments than your current plan permits with the potential for higher appreciation? Many people choose traditional and Roth IRAs over a self-directed IRA (SDIRA). However, knowledgeable investors may be missing out on investment opportunities in nonstandard sectors like real estate, private equity, crowdfunding, and cryptocurrency. A self-directed IRA opens up these possibilities. Interested in learning more? Discover how to set up a self-directed IRA and tips you should kn ..read more
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Qualified Small Business Stock (QSBS) Section 1202 Exclusion
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
Qualified Small Business Stock (QSBS) Section 1202 Exclusion If you’ve ever sat down on a Sunday afternoon to read the tax code, you’re probably familiar with section 1202. If you haven’t, you’ll want to keep reading for a brief overview of how this mere footnote can leave a big footprint on the tax burdens of small business investors.  Section 1202 is the partial exclusion for gains from qualified small business stock.  What is Qualified Small Business Stock? Qualified Small Business Stock (QSBS), sometimes referred to as “section 1202 stock,” is an internal revenue code (IRC) exclu ..read more
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How to Become a Venture Capitalist
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
When you picture a venture capitalist, you probably imagine someone wealthy. How do venture capitalists make money, though, and what exactly do they do?  Becoming a venture capitalist is no easy feat. In fact, you’re more likely to be drafted into Major League Baseball than you are to become a venture capitalist — but Major Leaguers don’t count the odds and we bet you don’t either.  Maybe you’re one to defy odds and wonder how to become a venture capitalist.  If you’re looking to break into the world of venture capital, there are three main paths: becoming a successful entrepre ..read more
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Liquidity Ratio: Definition & Overview
EquityNet Blog » Angel Investing
by Judd Hollas
2y ago
Liquidity ratios are used to measure the financial health of a business. These metrics are used by banks and creditors to determine loan eligibility, and by investors to decide if the company is a safe investment. The liquidity ratio helps the company itself determine if they have too little capital or have a surplus of capital that can be put to use. What is a Liquidity Ratio? The liquidity ratio is a comparison of a company’s liquid assets versus their current liabilities. It essentially answers the question, “If this company was forced to pay off all of its debts right now, would it be abl ..read more
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