Archive for December 2014

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com.  To learn more, please join us for a webinar on this topic on January 14.

We're all aware of the amazing research and technologies that universities are doing to improve people's lives. What makes many angels excited is that these new innovations can lead to great companies - if universities can connect with the right startup entrepreneurs.  

What is often surprising to learn is how difficult it is for angels and universities to work together to bring these technologies to market. While Google, started by Stanford graduate students Sergey Brin and Larry Page, is forever connected to the university through licensing agreements, many successful companies such as Facebook, Microsoft and Dell weren't. Although they were conceived of by college students, they were started after the founders left school.

What causes these gaps? Jamie Rhodes, a former university tech transfer head, serial entrepreneur and founder of Alliance of Texas Angel Networks plus an Angel Capital Association (ACA) board member, notes that other than Stanford and MIT, few universities have figured out how to transfer their technology into successful startups. One reason for Stanford and MIT's success is that their professors understand the importance of having relationships with entrepreneurs and investors. Their technology transfer offices understand that a successful partnership means more than a big corporate licensing agreement. So how can angels and universities tighten their partnerships to close these gaps?

By: Marianne Hudson, ACA Executive Director

Last week, President Obama signed the Tax Increase Prevention Act, which includes several benefits for small businesses and also a benefit for angel investors. We want to get this information out to you, as this benefit relates to investments made in 2014 (retroactively and through December 31).

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock (also known as “Section 1202”) and this new law effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply. If you are interested in this program, PLEASE TALK TO YOUR ACCOUNTANT to ensure you have all the information you need to structure your investments to meet all requirements.

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.

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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