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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."

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. 

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

Dave Berkus is one of the most successful angels I know.  He has made 108 investments in early-stage companies and has an IRR of 97 percent.  Dave is a special case – he is a top speaker, expert in corporate governance, and has a valuation methodology named after him – even so, are there insights smart angels can pick up from this Los Angeles-based investor?

What is it about Dave that makes him that good? More to the point--are there traits we can emulate from successful angels like him?

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."

Call it high optimism.  Every entrepreneur puts a positive spin on his or her situation occasionally. Maybe you’ve done it yourself: your deal with a big customer is only days away from closing; the next version of your product will be released in less than a month. Marketing is, after all, presenting a product, service or brand in the best possible light, and there’s nothing wrong with that. It’s crossing the line from positive spin into wishful thinking that leads to trouble.

When startups cross the line, it’s often in an effort to get to “yes” prematurely with an investor or business partner. Unfortunately, the results can be far-reaching.

By: Robert Fisher, CEO of Fisher Tanner Associates. He is a member of Ohio Tech AngelsX-Squared Angels, and the Angel Capital Association.

Editor’s Note:  The opinions in this post are from the author and do not necessarily reflect those of the Angel Capital Association.

Funding small companies through the issuance of private securities has proven to be among the most productive and efficient means of spurring innovation and job creation. A new recommendation from an advisory committee seeking to redefine who is qualified to invest in small companies puts undue focus on predicting levels of theoretical risk to unprotected investors. Such a redefinition is apt to constrain capital and damage the large and flourishing market for small company funding in place today. This blog reviews the issue and proposes a more balanced risk/benefit approach with the objective of increasing the capital available for new private investment while minimally affecting risk levels for investors or adding friction to today’s funding process.

By: Doug Doan, founder of ACA member Hivers and Strivers, an angel investment group that invests exclusively in companies started by military veterans. ACA is supporting the celebration of National Veterans Small Business Week with a Veterans Syndication Event on November 12 in Boston.

An important fact about American veterans is also the least reported and understood.  Our Army, Navy, Air Force and Coast Guard veterans are turning into superb entrepreneurs and are unusually successful starting and running new business enterprises.  Surprised?  You shouldn’t be. Many military vets use the very skills, leadership, and drive learned the hard way from service in wartime to build and run great companies.  Let’s call it Post Traumatic Growth or PTG. 

Companies such as Ridescout, founded by two West Point grads and combat leaders, brought the drive, determination, and fierce execution skill skills learned in the Army. They have been so successful in opening up a new market, their company was recently gobbled up by Daimler Benz, with a nice return for the angels involved.

By: Roland Schumann, a successful entrepreneur who was a pioneer in the cloud computing industry. He is an active angel investor, serving on both the Executive Committee and Screening Committee of the Sierra Angels investment group based in Lake Tahoe.

As a member of the Sierra Angels, I’ve had the chance to think about what makes angel group members effective. While some angels merely sit on the sidelines and view the investment process from afar with little personal involvement, others choose to roll up their sleeves and actively investigate promising deals. The 7 habits identified below are intended to help all angel investors understand why getting involved as an active participant will greatly increase their likelihood of success.

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."

At a conference I attended recently, a panel of pre-revenue company founders was asked, “What’s your revenue model?”  The answers were honest, although not investment-ready:

“We’re really not focused on that now, because we’re just trying to generate a following.”

“I’ve talked to business owners, and if we can provide them with access to these customers, the business owners are willing to pay for the service.”

It takes discipline to research and develop a viable revenue model in the early stages of a business. Here’s an example of an entrepreneur who did.

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