The term "web 1.0" is still ill-defined but broadly refers to an information exchange frame work that existed for roughly the first 15 years of the world wide web, which started in 1990(1). The preceding personal computer era had caused information to become digitized, allowing an idea to be expressed on a Word document rather than a written letter. While the computer enhanced the individual's ability to improve the idea, it was the development of the early world wide web (web 1.0) that allowed the individual to better communicate that idea with the use of web page's and blogs. A major limitation of web 1.0 is that the idea was static, the product one person's thoughts and experiences.
Web 2.0 is said to have started in 2005(2) and can be defined as networks of people interacting together on the internet based on a common interest. Chat rooms and discussion groups can allow thousands of individuals to interact to optimize an idea rather than having thousands of people read one person's web log about an idea. Blogs themselves have been changed in web 2.0 with the advent of wiki software that allows a web page to be edited by thousands of users (eg Wikipedia), have further improved the internet's ability to allow communities to create ideas rather than simply to transmit ideas from one person to a community of internet viewers. The millions of computers that make of the world wide wide can now be compared with the neurons that make up the brain.
Of all the different financial marketplaces, private equity stands to benefit the most from the latest generation of the internet because it is the most inefficient(3). In fact, because of restrictions imposed by the Securities Act of 1933, shares of private companies cannot be generally solicited or traded on stock exchanges. The SEC requires time-consuming paperwork (Form 144) in order to transferred private equity shares from one investor to another. Furthermore, the 'market' for the unregistered shares of private companies is restricted to sophisticated investors that pass an eight part test to determine whether they are accredited.
Private Equity 2.0 is one of the first web sites to bring the power of web 2.0 to private equity. We have adopted limitations imposed on the private equity market place by the Securities Act of 1933 as the registration requirements PEWeb2.0. (We do allow non-accredited students to use the web site for academic purposes if they sign a disclaimer.) In addition, because the SEC requires a 'substantial' relationship(4) with financial web site users , we require investors to graduate from the Private Equity Institute before working with private companies raising capital. Our chat rooms and discussion groups allow investors to benefit from a wide range of opinions about a company raising capital, not the potentially biases opinions of a Wall Street analyst. Finally, our use of the internet to solicit, in a regulatory compliant manner, investors increases the likelihood that investment and investor will be brought together in a private equity deal.
