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Angel Insights Blog

Serving as the voice of the North American angel community, the Angel Capital Association is pleased to bring you our Angel Insights Blog, featuring commentary on startup investment trends, the latest on public policy affecting entrepreneurial investment, and other topics top of mind to active accredited investors.

We encourage you to participate in the discussion.

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

Asked to explain his investment philosophy to a group of entrepreneurs, the founding partner of an investment fund put it this way: “There are only two things I care about: Can you make product, and can you sell product?”  If you’re the founder of a startup, you know first-hand that sales drive revenue, and revenue drives both investment and growth. How good are your sales skills?

All sales are the result of creating a connection with the buyer, and the best salespeople are adept at developing meaningful business relationships with their prospects. Here are some essentials to developing relationships like a sales pro.

As we say goodbye to 2014 and jump in to 2015, we would like to add our congratulations to all ACA members with recent growth, investments, and exit news!   Here are a few recent stories below:

Big Returns!

By: Christopher Mirabile, ACA Board and Launchpad Venture Group

This post originally appeared on ScratchPaper.

Competent entrepreneurs can explain their company in terms of what the product does. Good entrepreneurs can explain their company in terms of their customer and their market. Fundedentrepreneurs can pitch their company in terms that an investor can relate to.

For most entrepreneurs, it’s not easy or intuitive to put the investor version of the story together. They can talk a blue streak about the product, the customer, maybe the market. But they cannot pitch the business as a good investment in a way the investor can quickly grab onto.

Turns out, there is an easy formula that works nearly universally. The key to this formula is that it covers all the required subjects, but strings them together into a coherent and engaging narrative flow. Once you grok the formula, it all kind of clicks and you suddenly understand what it is you are trying to convey. From then on, it’s easy.

By: Marianne Hudson, ACA Executive Director

ACA is aimed at providing the best information and resources for our member angels and the startup community. As we begin what we hope is a fantastic year for investors and entrepreneurs alike, we share 32 of the best articles, blogs and books in our field from 2014 to help you build your own libraries.

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com.  To learn more, please join us for a webinar on this topic on January 14.

We're all aware of the amazing research and technologies that universities are doing to improve people's lives. What makes many angels excited is that these new innovations can lead to great companies - if universities can connect with the right startup entrepreneurs.  

What is often surprising to learn is how difficult it is for angels and universities to work together to bring these technologies to market. While Google, started by Stanford graduate students Sergey Brin and Larry Page, is forever connected to the university through licensing agreements, many successful companies such as Facebook, Microsoft and Dell weren't. Although they were conceived of by college students, they were started after the founders left school.

What causes these gaps? Jamie Rhodes, a former university tech transfer head, serial entrepreneur and founder of Alliance of Texas Angel Networks plus an Angel Capital Association (ACA) board member, notes that other than Stanford and MIT, few universities have figured out how to transfer their technology into successful startups. One reason for Stanford and MIT's success is that their professors understand the importance of having relationships with entrepreneurs and investors. Their technology transfer offices understand that a successful partnership means more than a big corporate licensing agreement. So how can angels and universities tighten their partnerships to close these gaps?

By: Marianne Hudson, ACA Executive Director

Last week, President Obama signed the Tax Increase Prevention Act, which includes several benefits for small businesses and also a benefit for angel investors. We want to get this information out to you, as this benefit relates to investments made in 2014 (retroactively and through December 31).

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock (also known as “Section 1202”) and this new law effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply. If you are interested in this program, PLEASE TALK TO YOUR ACCOUNTANT to ensure you have all the information you need to structure your investments to meet all requirements.

By: Elizabeth Usovicz, General Manager of Transaction Commons, as part of a series she writes for ACA aimed at entrepreneurs, "Your Pitch is Just the Beginning."

If you’re a startup founder, you probably have an investor-ready answer to the question, “Who are your competitors?” Your biggest competition isn’t always the industry heavyweight identified in your competitive analysis. Sometimes, a stealthy competitor shows up instead in your sales pipeline - as the prospect’s decision to do nothing. Is the status quo your competitor?

Competition from the status quo can surface at any time during your business development activities.  In a conversation with a prospect, the status quo is often expressed as “Thanks, we’re all set.”   If you’re hearing repeated requests for more information, long after you thought the prospect was purchase-ready, it’s the status quo again.

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

Is there ever an upside when a risky startup investment evaporates right before your eyes? Absolutely! The US government provides a tidy benefit to angel investors who take on the risk and economic impact of these investments. The trick is to know how to recoup some of your losses to reduce your tax bill. There are also tax strategies that help angel investors keep more of their earnings when they have winning exits. This is critical knowledge to have because it keeps us angels in the investment game so we can fuel new startups and the economy.

Although federal income tax laws are critical to understand, they are secondary to the savvy angels’ investment strategy. First and foremost is always to evaluate the potential of the business and team you are looking to invest in. Tax considerations are just one piece to consider. And of course, consult your tax advisor for suggestions based on your personal situation.

Many in the world are waking up to the huge importance of entrepreneurs – who create high quality jobs and innovations that change people’s quality of life.  Entrepreneurs, investors, incubators, universities, and a wide variety of community leaders have known about this for a long time, but now the public and elected officials are also seeing it.

They’re also celebrating entrepreneurs and now angel investors in a series of events, proclamations, articles and other programs:

  • Global Entrepreneurship Week – “GEW,” which is all this week, is the world’s largest celebration of entrepreneurship and is the innovators and job creators who launch startups that bring ideas to life, drive economic growth and expand human welfare.  During one week each November, GEW inspires people everywhere through local, national and global activities designed to help them explore their potential as self-starters and innovators. These activities, from large-scale competitions and events to intimate networking gatherings, connect participants to potential collaborators, mentors and even investors—introducing them to new possibilities and exciting opportunities.

  • Global Business Angels Day – The first ever “GBAD” (I’m still thinking on that acronym) is a part of GEW, aimed at highlighting the role that business angels play in helping new firms start and scale – driving innovation, jobs, and economic growth around the world.  ACA and our colleague angel associations all over the world are part of the celebration – including Canada, Europe, Middle East and Africa.

By: Christopher Mirabile, ACA Board and Launchpad Venture Group

This post originally appeared on Inc.com

If you can’t describe what a great mentor does, you’ve probably never had one.  A great mentor relationship is actually a pretty rare and special thing.  It doesn’t come about all that often, and it’s not something that can be forced.  But it is worth trying to find one or more if you can, because having great mentors can be so powerfully helpful. 

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Celebrate ACA Member Activity and Exits by sdickey  on  January 15
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