Archive for August 2013

Earlier this month, Laura Baverman wrote an article in USA Today entitled "Time is Right to Consider Angel Investing".  I was tickled with the article because not only did it get the message to many potential angels that angel investing could be a great activity for them, but that it quoted a number of ACA members and friends - such as Dan Mindus of NextGen Angels, John May of New Dominion Angels, the managing team of Golden Seeds (great photo, by the way!), and Rob Wiltbank of Willamette University and the Angel Resource Institute, among others.

If you are new to angel investing or just starting to think about making these investments in innovative startups, I recommend that you talk with people you know who are angel investors, attend an angel group meeting near you to get an idea of how they work, and read up on how angel investing works with articles, posts, and books from experienced angels.  ACA and our members are here to help you as you learn about the fun, adventurous and fulfilling world of investing in and mentoring some really great entrepreneurs.

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

Therefore OTAF added the premortem discipline to our due diligence process, making it a required step prior to recommending any investment. With the benefits greatly outweighing the time required, we are convinced there is a high return on this effort.

Project planning has exposed many executives to the premortem technique which is nicely explained by Gary A. Klein in his September 2007 Harvard Business Review piece entitled “Performing a Project Premortem”: http://hbr.org/2007/09/performing-a-project-premortem. In this article he states:

Dan Rosen is a Board member of the Angel Capital Association, the world’s largest organization of accredited investors, and is also chairman of the Alliance of Angels, a Seattle-based angel investment group.  To read the original post on VentureBeat, click here.

On July 10th, the Securities and Exchange Commission released rules allowing entrepreneurs to publicly advertise their investment opportunities, finalizing a portion of the JOBS Act of 2012. These included a final rule lifting the ban on general solicitation and provided guidance on how issuing entrepreneurs could “reasonably” verify their investors are accredited; a final rule disqualifying “bad actors” from investing in private offerings; and a proposed rule requiring entrepreneurs to submit multiple reports and information for solicited offerings. The Angel Capital Association (ACA) has taken a strong stance on these rules, stating that these rules could greatly reduce entrepreneur access to angel investment, as they require investors to provide their private wealth or income information to issuers or third parties, and also may require entrepreneurs to submit considerable information to the SEC with harsh penalties for missing filing dates.

Choose Taurman and Clayton White are members of ACA and co-founders of the South Coast Angel Fund, formed in 2010 to foster entrepreneurial endeavors throughout Louisiana and the Gulf Coast. The group recognizes the value of supporting the entrepreneurial community for the economic benefit of the entire region. Their initiatives include seminars, mentoring start-up companies and early stage capital. We recently spoke with Choose and Clayton about their outlook on angel investing and how that is being shaped for the next generation in New Orleans and the Gulf Coast.

ACA: Tell me a bit about your professional backgrounds leading up to South Coast Angel Fund.

Choose: I came to New Orleans after the army and attended Tulane University Graduate School of Business. During this time, I fell in love with venture capital but quickly realized that there weren’t going to be many VC deals in New Orleans, as they were mostly in Houston and Boston at the time. My wife and I started our own business in factory and plant automation, which we sold years later. After Katrina, Clayton and I, who had known each other for years, met up again, and we started a conversation about how we could work together.

Clayton: My background is in law. I also co-founded a business in 1985 and took it through two rounds of venture and fell in love with the process. After Katrina, Choose and I began to talk about how we could work together. We thought about starting an angel fund and were quickly introduced to the Irish Angels and Piedmont Angels. They opened their arms to us, and we had the opportunity to watch how they operated for two years. Out of that experience, we started the South Coast Angel Fund.

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Tapping into America’s Biomedical Seed Fund by Ethel Rubin  on  February 12
The Seraf Method to Valuing Startups: Exit Practicalities by Ham and Christopher LM  on  January 16