A Private Placement is the sale of an issue of Debt (Loan) or Equity (Stock) securities to a limited number of buyers that are qualified as Accredited Investors. The Placement is generally made by an Investment Banker, who acts as an Agent of the Issuer, bringing together the Issuer (business or corporation) and the Buyer(s) (Accredited Investor(s)). The Accredited Investor may be an individual, an entity (business or corporation), or an Institutional Investor (Mutual Fund, Bank, etc.), Pension Fund or Insurance Company. Because of the sophistication and experience of these investors, the securities offered in a Private Placement are exempt from the registration requirements of the Securities and Exchange Commission and most states.

An investment in a Private Placement is generally considered speculative and highly risky. Investors must meet the qualifications of Accredited status in order to qualify as a purchaser. An investor in a Private Placement must be capable of enduring the loss of the total investment and must not require the funds invested for living expenses, retirement or other purposes.

Who may participate in Private Placements?
Investors may participate in Private Placement offerings by qualifying under one of the three investor definitions under SEC Regulation D Rule 506... Accredited, Sophisticated, or Foreign.

Bridge Loans
A Bridge Loan is generally defined as a short-term, or emergency financing that "bridges" the need for capital between the Private Placement and longer term financing (in most cases, an Initial Public Offering or IPO). The corporate financing methods used and amount of capital raised may vary from case to case. Typically, the corporate financing sequence for a start-up company may go as follows:

Example: *
 

Start Date --->	6 months - 1 year --->	1 year or more
Private Placement	Bridge Financing	Initial Public Stock Offering
$2/share	$3/share	$6/share
$2 million	$500,000	$10 million

* The structure, amount, and timetable used in this example may be considered fairly "typical;" however, it is important to recognize that dollar amounts raised, structure, and timing vary from one offering to another depending upon the particular circumstances of each Private Placement.