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b. "In-state qualified business" means an early-stage or mid-stage private, nonpublicly traded enterprise that: (1) Is created, or its satellite operation is created, as a for-profit entity under the laws of this state. (2) Has its principal office in this state and has the majority of its business activity performed in this state, except sales activity, or has a significant operation in this state that has or is projected to have more than ten employees in this state. (3) Relies on research or the development of new products and processes in its plans for growth and profitability. (4) Is in compliance with state and federal securities laws. (5) Is not an entity or enterprise which is engaged in real estate development, is a real estate holding company, derives income from the selling or leasing of residential or commercial real estate, or carries on operations in the hotel, restaurant, convention, or hospitality industries, or makes any other similar use of real estate. (6) Is certified as an in-state qualified business that meets the requirements of this section by the department of commerce. c. "Investment" means a cash investment in an in-state qualified business or out-of-state qualified business that is made in exchange for common stock, a partnership or membership interest, preferred stock, debt with a mandatory conversion to equity, or an equivalent ownership interest as determined by the tax commissioner. d. "Mid-stage entity" means an entity with annual revenues over two million dollars not to exceed ten million dollars. e. "Out-of-state qualified business" means an early-stage or mid-stage private, nonpublicly traded enterprise that: (1) Is created as a for-profit entity. (2) Relies on research or the development of new products and processes in its plans for growth and profitability. (3) Is in compliance with state and federal securities laws. (4) Is not an entity or enterprise engaged in real estate development, is a real estate holding company, derives income from the selling or leasing of residential or commercial real estate, or carries on operations in the hotel, restaurant, convention, or hospitality industries, or makes any other similar use of real estate. (5) Is certified as an out-of-state qualified business that meets the requirements of this section by the department of commerce. 3. An angel fund must: a. Be a passthrough entity organized after June 30, 2017, as a domestic for-profit entity under the laws of this state, and have its headquarters in this state. b. Not have invested, or intend on investing during its certification period, in real estate or real estate activities as described under subdivision e of subsection 2. c. Consist of at least six accredited investors as defined in regulation D, rule 501 of the federal Securities Act of 1933. d. Not have more than twenty-five percent of its capitalized investment assets owned by any one investor. e. Have at least five hundred thousand dollars in commitments from accredited investors which are subject to call to be invested over an unspecified number of years to build a portfolio of investments in enterprises. f. Be member-managed or a manager-managed limited liability company and the investor members or a designated board that includes investor members must make decisions as a group on which enterprises are worthy of investments. g. Be certified as an angel fund that meets the requirements of this subsection by the department of commerce. Page No. 16