By Bethann Kassman, CEO of Go Beyond Network, an ACA member angel group in Naples, Florida, which is part of an international angel organization Go Beyond Investing, which completed a study of the financial returns and experiences of its member angels in Europe and the United States.  To download the report, go to https://go-beyond.biz/ and click on “download report”.

Go Beyond Investing, the international business angel platform, recently launched The Go Beyond Investor Report: Introducing Angel Investing as an Asset Class for All Investors. The Report, based on six years of data, shows that taking a portfolio approach is critical but not sufficient for delivering success to angels and the entrepreneurs they back. In addition, there must be tools to educate investors both in a learning environment and “on the job”; ability to invest with small tickets; access to deals that have benchmarked valuations and terms; mechanisms to leverage the community intelligence and professional deal leadership certification and compensation.

By: Ken Kousky, BlueWater Angels and Krista Tuomi, American University

A number of public policy activities and initiatives that occur in American states are just as important to angel investors as federal-level issues.  The key state issues include tax credits for angel investments, matching co-investments by the state, grants and incentives to angel networks and even state-run venture and angel funds.  Knowing what works remains a critical challenge at both the state and national level requiring that we organize and support our interests in both arenas.

Our last blog post analyzed some international matching grants, highlighting in particular the well-designed New Zealand and Israeli programs. This blog examines four types of public offerings in the US. 

By Bill PayneFrontier Angel Funds

The median pre-money valuation of seed stage deals has increased since 2010, as the US economy has emerged from the recent recession.  The following table shows the pre-money valuation of seed stage deals from several sources over the past five years:

By: Ken Kousky, BlueWater Angels and Krista Tuomi, American University

The Angel Capital Association has played an important role in shaping the most vital public policy issues that affect angel investment practices ranging from the implementation of the JOBS Act to the definition and verification of accredited investors. While meetings with the SEC and Members of Congress have been vital for ACA members, political actions at the state level are just as important.

The key state issues include tax credits for angel investments, matching co-investments by the state, grants and incentives to angel networks and even state-run venture and angel funds.  Knowing what works remains a critical challenge at both the state and national level requiring that we organize and support our interests in both arenas.

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."

A few weeks ago, I spoke to MBA candidates at a business school conference. They were passionate about becoming entrepreneurs and were in the process of refining prototype products. Yesterday, I met with another aspiring entrepreneur – a corporate veteran with a product, a patent and a launch plan. Despite the obvious differences in career and product development timing, the students and the corporate veteran shared common traits: they were passionate about their ideas, dreaming big and determined to perfect their investor pitches.

By Michelle Stewart and George Willman, of Reed Smith LLP

Traditionally, investors have selected between two main modes of accomplishing early-stage financing – direct issuance of equity or convertible debt.  There have been some changes over time, such as the increasing proportion of early-stage financings using convertible notes, and increased investor demand for better economics in the notes, with features such as valuation caps and discounts to conversion. However, for a long time, early-stage investments were generally limited to these two modes of financing without a lot of fundamental change. 

Recently, several new approaches have emerged, which have generated quite a bit of interest in the early-stage financing community.  These include SAFE (Simple Agreement for Future Equity), KISS (Keep it Simple Security), and Series Seed. SAFE, proposed by Y Combinator, and KISS, proposed by 500 Startups, were quickly adopted by companies coming out of these well-known accelerators.  But the use of, and interest in, these new approaches reaches beyond these portfolio companies to other emerging companies looking for something different.  The Wall Street Journal highlighted this trend recently in “Startups Offer Unusual Reward for Investing - Simple Agreement for Future Equity promises benefits later if the firm is able to move forward,” April 1, 2015.

The 2015 ACA Summit in San Diego brought a great combination of professional content, networking among angels and thought leading speakers and sponsors – and let’s be honest, great weather and settings. More than 630 investors, sponsors and presenting entrepreneurs attended the program. Lots of great materials are posted on the event community app, but sometimes the best way to review what happened is in pictures. Below is my tour of the various events held on April 13-16, 2015 – with photos taken by Summit attendees on social media.

What does it take to be named the most innovative ACA angel invested company for 2015? Well, Ann Arbor, Mich.-based RetroSense Therapeutics, has just raised the bar. The high-flying biotech is developing life-enhancing gene therapies designed to restore vision in patients suffering from blindness due to specific ailments.

RetroSense Therapeutics CEO Sean Ainsworth stated, "It's really exciting and an honor to win the Luis Villalobos Award, which highlights some of the amazing innovations that can come to life through the power of angel investing. Our angel-backed series A, of $7 million, has enabled us to complete studies needed to enter clinical trials and will fund early clinical development.  It's great to have the recognition from ACA for the progress we're making toward restoring vision.

Each year the Angel Capital Association and Angel Resource Institute shine a spotlight on one individual whose collective body of work brightens the advancement of the field of angel investing. This year we honor Susan Preston.

Like many angel investors, Susan brings a depth of passion to her work which currently includes General Partner for the CalCEF Clean Energy Angel Fund, which focuses on seed/start-up stage investments in clean energy technology. She is also the Managing Partner for the new Seattle Angel Fund, committed to fostering entrepreneurial growth in the Pacific Northwest through early-stage investments.  Susan teaches in the MBA program and is the Buerk Endowed Fellow for Entrepreneurship at the University of Washington. She also serves as co-chair and lead instructor for the Angel Resource Institute, a global investor and entrepreneur education organization. She has been named as one of the Managers for the new Element 8 Angel Fund and is a board member for Element 8, a Seattle-based clean-tech investing angel group. In 2014 Susan received the Small Business Person of the Year award from the Small Business Council of America and the Senator Cantwell Women of Valor award.

By Bill Payne, Frontier Angel Funds

Three outcomes dominate exits of angel-funded companies:

  • Dead bugs – Startups that go out of business, returning less-than-invested capital to angels (usually zero).
  • Positive exits – Companies that liquidate with capital gains to investors, usually via a cash sale to a larger company.  While IPOs are possible, they are very rare for angel-funded companies.  The exits can range from simply return of capital to wildly exiting multiples.
  • The living dead – These companies continue indefinitely to operate with internally generated cash without pursuing an exit.  By intention or due to market forces, these entrepreneurs turn what at first appeared to be a high-growth opportunity into a lifestyle company, that is, a company that meets payroll for all employees but does not demonstrate sufficient upside potential to attract buyers.  Such companies are going sideways and, as such, offer no opportunities to angels to harvest their investment – not even to write off their investment.  There are also examples of entrepreneurs who “get comfortable” with the income provided by their startup companies and simply choose not to pursue an exit.

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Evidence from Go Beyond Investing AG Shows that Angel Investing Can Deliver Returns by Bethann Kassman (Go Beyond Angel Network)  on  May 26
Matching Grants: What Does Your State Have? by Kousky and Tuomi  on  May 18