Archive for October 2015

By Krista Tuomi, Associate Professor, American University

Entrepreneurs often explore a range of funding sources to expand and/or finance working capital, including ‘alternative’ ones such as peer-to-peer (P2P) lending and invoice financing.  These have recently been enjoying media exposure, sometimes erroneously grouped in the same category as angels.  As with my previous blog post on bank loans, this table is supposed to give a rough idea of the advantages and disadvantages of each source.  Such information is useful when advising a firm, or considering investing in one which has already tapped this pool of money (and probably is paying dearly for it).

By: Joseph W. Bartlett, Special Counsel, McCarter & English LLP; Chair Emeritus, ACA Public Policy Advisory Council

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

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."

In films and on television, characters routinely breeze through sophisticated software, easily cracking codes and accessing just-in-time information. In Jurassic Park, for example, thirteen year-old Lex Murphy reboots the park’s sophisticated computer systems - just after surviving a velociraptor attack in the kitchen. 

In the real world, software applications are not as user-accepted and intuitive. As reported in Fortune, a 2014 a survey of failed startups found that that 42% self-identified the reason for failure as lack of market need for their product.

By: Marianne Hudson, ACA Executive Director

Yesterday I took a call from an accelerator managing partner who wanted to educate some of his investors on how to get started in angel investing.  As I put together a list of resources for him, it occurred to me that lots of angel investors and others are interested in this information, so let me share my list here!

This is also a chance to mention that the Angel Capital Association is now starting our new monthly “Best Practice” Webinar series aimed at providing education on the key things new investors need to know:  having a portfolio strategy to begin with, valuation, due diligence, term sheets, sourcing deals, etc.  If you like these, you can also download the decks from the main webinar page.  This program is in partnership with The Rising Tide Fund, Kauffman Foundation, Go Beyond Investing, Portfolia and Next Wave Ventures.  We’ll have more information about this exciting program soon.

By: Joseph W. Bartlett, Special Counsel, McCarter & English LLP; Chair Emeritus, ACA Public Policy Advisory Council

The appropriate legal domicile for the company’s organization and filings. In almost every case, Delaware is the appropriate choice. Despite media insinuations, Delaware is not a tax haven. State income taxes are levied on the basis of factors which are not influenced by a Delaware domicile. The reasons for Delaware are practical: The Delaware Secretary of State’s office is better organized and staffed so that the initial organization of a corporation or limited liability company is a matter of a few minutes.

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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