By: Marianne Hudson, ACA Executive Director

Recent progress to the American Innovation Act of 2018 (AKA “tax reform 2.0”) to include a proposal to protect Net Operating Losses (NOLs) of startups has the Angel Capital Association cheering.  ACA, along with the National Venture Capital Association, Biotechnology Innovation Organization and AdvaMed called for Congress to address an unintended consequence of rules blocking “loss trafficking.” The bill was introduced to reform rules that can unintentionally punish startups for attracting investments to support the growth of their companies.  Reform to the existing rules, written in the mid-1980s, will have significant impact on startup companies and their ability to gain full valuation for additional investments and exits.

By: Marianne Hudson, ACA Executive Director

Last week I had the pleasure of attending the board meeting of the Center for American Entrepreneurship.  This non-profit, non-partisan organization provides education and advocacy on the critical importance of entrepreneurs and startups to innovation, economic growth and job creation to America’s policymakers.  CAE has advocated for several issues that ACA cares about.

By: Charlie Brock, ACA Member, Launch Tennessee

Over the last five years as the CEO of Launch Tennessee, too often I’ve seen founders raise angel or seed funding, develop a product line and a small customer-base, but not gain any real traction.  

By: John O. Huston, ACA Chair Emeritus and Ohio TechAngels

Like most ACA member groups, the Ohio TechAngel Funds (OTAF) conduct postmortems after our exits, regardless of whether they are positive or negative.  From our positive exits, we’ve gleaned that even our best entrepreneurs have always fallen woefully short of their revenue projections.  From the autopsies of our losing investments, we’ve realized that rarely had we missed major risks, but often grossly underweighted their likelihood, impact, or both.  And, we had insufficiently discussed them with management to ensure all possible efforts were being taken to mitigate them.

By: Tim Keane, ACA Member, Golden Angel Investors

This post originally appeared on Tim's blog.

Preparation: Key to Successful Private Transactions, especially in Hot Markets

For leaders of private, closely held companies, selling the company is an important and critical event in their lives.  There are several important considerations in managing the sales process to maximize results, avoid both delays and failure to close, all centered around preparation for the entire selling cycle.

In mid-2018 private equity transaction prices are at very high levels. This is good news for well prepared sellers who are able to execute on best practices when selling. 

Even in hot markets, however, a lack of preparation will produce a less than optimal outcome. 

By: Marianne Hudson, ACA Executive Director

This blog post first appeared on the Mainstar Trust blog.  

Being an angel investor has a certain cache. You’re sought after by entrepreneurs and assess the value of their ideas. You choose whether or not to invest, and how to make those investments – whether it is a self-directed IRA or with non-retirement funds.  And when things go well, you make money and you are a part of getting a business off the ground. In this light, who wouldn’t want to be an angel investor? 

By: Marianne Hudson, ACA Executive Director

The 2018 version of a US Economic Development Administration (EDA) grant competition may be just the ticket for multiple ACA members.  The Regional Innovation Strategies program offers a total of $21 million for locally-devised strategies to help more businesses start and grow.  As the program’s director, Craig Buerstatte, put it recently, the program is a “funding opportunity for business accelerators and incubators working to support job creation and economic development, and for venture fund managers, or angel groups working to address funding shortages in startup communities.” 

By: Ham Lord, Managing Director of Launchpad Venture Group and Co-Founder of Seraf-investor.com and Christopher Mirabile, ACA Chair Emeritus, Managing Director at Launchpad Venture Group and Co-Founder of Seraf-investor.com. 

This post originally appeared on Seraf-investor.com

Note: This article is the thirteenth in an ongoing series on valuation and capitalization. To learn more about the financial mechanics of early stage investing, download this free eBook today Angel Investing by the Numbers: Valuation, Capitalization, Portfolio Construction and Startup Economics or purchase our books at Amazon.com.

How to understand stock options and restricted stock

The first time you receive stock options as an employee is a magical moment. You feel suddenly part of something bigger than just earning a paycheck. You daydream about how various financial scenarios might play out. You take a sudden interest in the wellbeing of your company and the factors which affect its stock price.

By: Mark Graffagnini, Cara Stone, LLP, ACA Public Policy Advisory Council Member

The Investment Company Act of 1940 (the “ICA”) defines an “investment company” as any issuer which “is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.” This definition generally includes angel funds, venture capital funds and other types of private equity and hedge funds, unless an exemption applies.

By: Sarah Dickey, ACA Membership Director

Engaging the next generation of investors is something that is becoming an increased priority for angel groups to focus their efforts.  ACA member groups are developing volunteer analysts or similar programs to incorporate and educate young people while engaging them in important work for the group.  Benefits of this type of activity include augmented practices, increasing support and empowering individuals for the future.  Here are two examples of ACA member groups that are utilizing volunteer programs to invest in the next generation of angel investors.

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