There are several qualities that members must exhibit in order to be considered for admission. They must:
- Be an “accredited investor” in accordance with the SEC definition
- Willing to commit capital for investment in opportunities
- Have a track record managing and building successful companies as entrepreneurs, managers, or operating executives, or at least intimately understand company formation and growth.
- Be willing to contribute to the evaluation and due diligence of investment opportunities
- Be willing to communicate with others members, at least occasionally, regarding their thoughts about potential opportunities.
- Be willing to tolerate substantial risk and exhibit patience in receiving returns
- Agree to participate in at least one investment each year, totaling a minimum of $10,000.
- Agree to the terms of Jersey Angels set forth in membership documentation, and agree not to violate those terms
Accreditation
All individuals who wish to join JA must be “accredited investors”. According to Regulation D of SEC rule 501, there are several ways an individual may qualify as being “accredited.” The most commonly met of these criteria are (1) a net worth of at least $1M, (2) annual income over $200k, or (3) combined household income of over $300k. If any one of these criteria, or any of the other five criteria outlined in Regulation D are met, the investor meets the SEC guidelines for an accredited investor. For complete text of the regulation, please see this page of the official SEC website.
There are several reasons for this requirement. Firstly, is assumed that accredited investors can afford to absorb any losses associated with investments in risky securities. It is also assumed that these investors understand private investments and know what they are investing in. Lastly, and perhaps most importantly, accredited investors do not require regulated disclosure under SEC law. Prospective members do not need to prove their accredited status. By joining, a member must acknowledge the definition of accreditation as described here and in Regulation D of SEC rule 501, and thus waives his or her right to regulated disclosure under law.