Indiana Angel Network Fund II

INDIANA ANGEL NETWORK FUND II, LLC (“IANF II”)

EXECUTIVE SUMMARY OF INVESTMENT POLICY

 Focused on seed-stage investments starting at $100,000.

PURPOSE                                 

This executive summary of investment policy specifically applies to IANF II, which has been established to invest, hold, and account for funds invested by the State of Indiana, managed by Elevate Ventures, Inc. (“Elevate Ventures”) through its subsidiary Elevate Advisors LLC (“Elevate Advisors”) to foster and promote the development of entrepreneurs and emerging companies within the State of Indiana.

DEFINITIONS

Headquarters – means having the North American Principal Office Address located in Indiana per the Indiana Secretary of State Business Registration Filing and at least one C-Suite position residing in Indiana.

Significant Presence – means at least one (1) physical office and one (1) full-time employee within the geographic borders of the State of Indiana and conducting a significant portion of its operations within the State of Indiana as determined by Elevate Advisors; or at the time of initial investment, have a clear plan to use the IANF II investment to create a significant presence in the State of Indiana as a result of the investment.

INVESTMENT CRITERIA

1. Total investments by IANF II in any one Investee shall not exceed One Million Dollars ($1,000,000.00). Each IANF II investment shall be on substantially similar terms as those offered to other private investors in the round.
2. Round size cannot exceed $20,000,000.
3. The Investee shall be required to provide quarterly business updates.
4. Each IANF II investment shall be made into a business that:

(a)   has 500 employees or less

(b)   is determined by Elevate Advisors to have its Headquarters in the State of Indiana; or committed to, or be in the process of, initiating, or expanding its operations to have a Significant Presence in the State of Indiana;

(c)    is primarily focused on:

(i)     a high-growth business model where venture funding is likely to benefit that growth;

(ii)   the commercialization, transfer, and/or application of research and technology into marketable products; or

(iii) a business plan that is determined by Elevate Advisors to have significant potential to: bring substantial capital into Indiana, create jobs, or diversify the business base of Indiana.

• is an innovation-driven enterprise with a total addressable market of at least Five Hundred Million Dollars ($500,000,000);
• has had average annual revenues of less than Fifteen Million Dollars ($15,000,000.00) in its two (2) most recent fiscal years; and
• is not primarily engaged in a business involving: real estate; real estate development; insurance; professional services provided by an accountant, a lawyer, or a physician; or oil and gas exploration.

1. The investment has been evaluated by Elevate Advisors to meet or exceed its investment merit criteria.
2. Elevate Advisors may take a lead investor role in structuring investment terms, including financial, corporate governance, and other applicable operational requirements, through IANF II investment.
3. Each IANF II investment is required to be syndicated with other capital sources on a minimum 1:1 basis.

PROHIBITED USE OF FUNDS

IANF II is prohibited from making investments to:

• Finance a non-business purpose;
• Refinance existing debt where the lender is in a position to sustain a loss and the investment would take over that loss through financing;
• Effect a partial change of business ownership or a change that will not benefit the business;
• Permit the reimbursement of funds owed to any owner, including any equity injection or injection of capital for the business’ continuance;
• Repay delinquent state or federal withholding taxes or other funds that should be held in trust or escrow;
• Fund employee stock options (ESOPs).

INELIGIBLE RECIPIENTS

IANF II is prohibited from investing in or lending to the following ineligible businesses:

• • • Real estate investment firms, when the real property will be held for investment purposes
    • Firms involved in speculative activities that develop profits from fluctuations in price rather than through normal course of trade
    • Firms involved in lending activities, such as banks, finance companies, factors, leasing companies, insurance companies (but excluding agents of insurance companies), and any other firm whose stock in trade is money.
    • Pyramid sales plans, where a participant’s primary incentive is based on the sales made by an ever-increasing number of participants.
    • Firms engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted.
    • Gambling activities, including any business whose principal activity is gambling.
    • Charitable, religious, or other non-profit or eleemosynary institutions, government-owned corporations, consumer and marketing cooperatives, and churches and organizations promoting religious objectives.