Archive for June 2013

Editor’s Note: Syndication is one of the topics that remains at the forefront of many angel group priority lists—and for good reason—syndication is a critical component of angel investing success. When we look back 5+ years since ACA held its first collaboration committee meeting, established with the goal of improving syndication best practices across the nation, we can revel in how far we’ve come: From the leading syndication practices of some geographies like what we’ve seen in New England (which led to developing the ACA Syndication Guide in 2009), to the steady increase in angel group co-investing which for 2012 included 70 percent of deals evidenced by data in the 2012 HALO Report, we can pat ourselves on the back for the progress we’ve made. But despite this progress, there is more work yet to be done to tailor and refine practices to the differing needs across distinct angel groups, industry sectors, and geographies.

Below, Dick Reeves, ACA Board Member & Executive Director of the Huntsville Angel Network shares his personal views on the challenges and opportunities left to overcome in his realm.

This post was written by Jean Peters, ACA Board Member and Managing Director of Golden Seeds.

If the SEC takes advice it solicited at last fall’s annual government-business forum, accredited investors who are part of an angel group or network may enjoy a “safe harbor” when investing in a company that uses general solicitation to attract funds.

Under Title II of the Jumpstart Our Business Startups Act (JOBS Act), in order to claim the exemption while employing general solicitation, issuers must “take reasonable steps to verify” that all ultimate purchasers meet the accreditation standard.

This post was written by John Huston, ACA Chairman Emeritus and Founder & Manager of Ohio TechAngels.

At GUST’s June 17-18 Venture Forward Conference in New York City I enjoyed being a panelist with David Hornik (August Capital) and Bob Rice (Bloomberg’s alternative investment expert and The Alternative Answer author). Dave represented the top echelon of VC firms; Bob pointed out how few of Dave’s brethren share his success.

Our discussion surfaced how vastly the exit expectations of my angel group (Ohio TechAngels) differ from those of the top tier VCs. We are delighted to reap smaller returns (3 – 10X) if they consistently occur before five years. I explained that during our 9 ½ years of investing, we have always presumed our liquidity events would occur via an M & A event, never an IPO. We focus on how we can help our entrepreneurs orchestrate their sale, which we view as the ultimate alpha builder.

This post was co-written by David Verrill, ACA Chairman and Founding Manager and Partner of the Hub Angels, and Rob Spalding, Senior Advisor with Alternative Solutions Group, a self-directed retirement account consulting firm.

In the world of angel investing it is critical to know all the tools available for managing risk, creating value, and also addressing tax efficiency if possible. One of the most under-utilized tools for angel investing is a self-directed retirement account such as an IRA or 401(k). Many angels are just learning that private equity and private placements such as angel funds can be held in these accounts tax-deferred or tax-free. Hub members have been using this mechanism in the Hub funds for nearly 10 years, and we have five people in our current fund investing through self-directed IRAs.

This post was written by ACA Board Member, Catherine Mott.

What is happening behind the scenes in Washington? Could angel investors be cut off at the knees? Will the number of net job creators be cut to 1/3 of its current count?

Most of us are aware of the background: Section 415 of the Dodd-Frank Act (2010) required that Congress study criteria in 2013 to determine whether changes should be made to accredited investor definitions. This might include raising the financial thresholds (or recommending other criteria) to qualify for accredited investor status for eligibility to invest in private placement securities.

This post was written by Joseph W. Bartlett.  To read the original post, click here.

Entrepreneurs waste a lot of time soliciting professionally managed venture funds. Venture capitalists operate according to their own largely unwritten rules. In order to play the funding game, you must learn these rules. Below, I've listed some of the most-common mistakes. They won't tell you everything you'll need to know, but these simple rules should help you understand the VC process and avoid an enormous waste of time, energy, and opportunity.

Rule #1: Choose the Appropriate Audience

I had the pleasure of listening to Frank Peters interview Liz Marchi, coordinator of the Frontier Angel Fund in Montana, last weekend. The podcast interview was fun, as Frontier Angels had two exits in late 2012 – great for the entrepreneurs, investors, and the angel group itself. Or as Liz puts it “everyone understands the ‘do good’ part of angel investing, but it is great to ‘do well’ so I can invest again… It’s really fun to put capital in to build companies.”

Here’s information on the two exits:

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