Archive for May 2013

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, features a new post from his blog, ScratchPaper.  To read the original post, click here.

There’s a massive amount available on the interwebs on how to improve the odds for success in new ventures. But almost nothing concrete is available on the care and feeding of your investors. You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your investors updated, excited and engaged.

This post was written by Bill Payne in conjunction with Angel Capital Association.

Much like the real estate market, the starting point for determining the valuation of seed stage ventures is comparable deals. At what valuation have similar deals at the same stage, in the same business segment and in your region been funded recently? Knowledge of local recent transactions is key to establishing the valuation of the target company. And, it is important to acknowledge that the valuation of startup ventures changes with competition (lots of capital chasing deals in a given business sector increases median valuations) and with the business cycle (angels are less likely to open their pocketbooks during a deep recession, driving down valuations).

This post was co-written by John May and Wendee Wolfson, co-hosts of the 2013 International Exchange at the 2013 ACA Summit.

This year’s International Exchange (IE) at the ACA Summit, was comprised of 120 leading angels from around the world to exchange ideas, discuss challenges, and broaden their global networks. The 100%+ growth in attendance year over year and participation from 25 countries on 6 continents demonstrates a growing appetite for cross-border collaboration.
Below are highlights on some of the key topics from the sessions:

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, features a new post from his blog, ScratchPaper, that discusses angel investment decisions, and whether it is best to jump on the bandwagon or swim against the tide.  To read the original post, click here.

So the other day I’m chatting with a new angel about a very large round that had lots of momentum – it had been expanded and was still over-subscribed. Classic case, driven by the usual factors: little bit later stage with some traction, so risk is perceived as lower, great pitch by an appealing CEO, backed by a seemingly good team, momentum in the round building quickly, a product people can understand that is already built and in the stream of commerce, and, perhaps most importantly, a perception of scarcity as the round filled up.

For those of us living and breathing angel investing day in and day out, it can be hard to remember just how much angel investing has evolved in the past few decades. At the recent ACA Summit, I recounted some of the key shifts in the environment and described the impact this has had on all of us:

30 Years Ago…was when we really started seeing innovation migrate from large corporate R&D labs (largely due to cost cutting) towards early stage ventures that were more nimble at innovating on their own.

This post was written by Bill Payne in conjunction with Angel Capital Association.  Bill is has been actively involved in angel investing since 1980. He has funded over 50 companies and mentored over 100. Bill is also a founding member of four angel organizations: Aztec Venture Network, Tech Coast Angels, Vegas Valley Angels, and Frontier Angel Fund.

Perhaps the most difficult and contentious negotiations between angels and entrepreneurs develop over the valuation of seed stage deals. Most angels decided long ago that the answer is not convertible debt, which only postpones the valuation negotiations until a subsequent round. The best solution is a better understanding of the appropriate valuation for these risky seed stage deals and a proliferation in the use of sound methodologies for valuing early startups. Furthermore, the key to many valuation methods is a comparison to the median valuation of similar deals, that is, startups in the same region and comparable business sectors. Much like the real estate asset class, the valuation of comparable startups is an important consideration.

Yesterday I was on a conference call with several angel investors talking about public policy two issues that could have a huge impact on angel investors – and really the startups angels support. It strikes me that very few angel investors know these issues, so I’d like to make sure a few more people know about them. Both could change who qualifies to be an accredited investor and make it more difficult for investors to verify their accredited status.

SEC Rulemaking on General Solicitation in JOBS Act

Many of us know about the JOBS Act, passed a year ago to provide more access to capital for small businesses and therefore more jobs. Much of the Act hasn’t been implemented yet because detailed rules need to be set by the SEC. Most of the conversation has been about equity crowdfunding, but there is another issue that may have a much bigger impact on angel funding: how your accredited status is verified.

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, featured 3 video interviews from his blog, ScratchPaper, which he conducted at the 2013 ACA Summit.

Dave McClure, founder of 500 Startups.  Dave is a very well-known super-angel and the founder and general parter of 500 Startups, an internet seed fund and accelerator based in Mountain View, California. He’s an engineer and a marketer, working in both roles at PayPal, and has personally invested in 60-70 companies on his own, including some big name companies: Mint, SlideShare, Twilio, Bit.ly, and Jambool. Through 500 Startups, he has done almost another 500 or so more. Here’s what he had to say:

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