Don’t be surprised to see substantially more companies using Regulation A to sell securities through public solicitation of investors beginning June 19, when the SEC’s new “Regulation A+” rules take effect. Why? The new “Reg A+” provides a new option for “mini-IPOs,” allowing companies to raise up to $50 million from investors in unregistered public offerings. Angels benefit it two ways. This is another opportunity to invest or it can help their portfolio companies secure the funding needed to take them to the next level. 

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."

As an entrepreneur, your pitch is arguably the most important message about your company’s investment-readiness that you will ever deliver. Most entrepreneurs develop two versions of a pitch: a short, elevator version, and a longer, investor presentation with a slide deck. Your elevator pitch is much more than a compressed investor presentation without the slide deck. It’s a precious few seconds of your listener’s attention in which to communicate your passion, describe your innovative product or service and clarify its value from an investor’s point of view.  

ACA Membership Director Sarah Dickey interviews Jorge Varela as part of a series of profiles of ACA members

How and when did you get involved in angel investing?

I have been actively investing since before the word was popular. I made my first investment more than 15 years ago in TFB Corporation a company in which I later served as CEO.  I am still invested in the company and I am Chairman, but have been able to have two liquidity events and look forward to a third. I was involved in my first startup when I was 21, Braun Systems, which we sold a year later to ITT Systems in 1987.  I then moved to Silicon Valley before all the Valley excitement and became employee number three with VoicePlus, which we took public in a roll-up with Nhanced Technologies. These two early experiences gave me the bug for startups that I have not been able to shake. 

Seventeen states and the District of Columbia now allow non-accredited investors to invest in startups located in their state. As more states follow suit, it is useful to look at data detailing other countries’ experiences. Both the UK and Sweden have experimented with “equity crowdfunding” for non-accredited investors for a number of years now. Their experiences so far have been interesting, as have the implications for the UK and Swedish angel communities.

By Bethann Kassman, CEO of Go Beyond Network, an ACA member angel group in Naples, Florida, which is part of an international angel organization Go Beyond Investing, which completed a study of the financial returns and experiences of its member angels in Europe and the United States.  To download the report, go to https://go-beyond.biz/ and click on “download report”.

Go Beyond Investing, the international business angel platform, recently launched The Go Beyond Investor Report: Introducing Angel Investing as an Asset Class for All Investors. The Report, based on six years of data, shows that taking a portfolio approach is critical but not sufficient for delivering success to angels and the entrepreneurs they back. In addition, there must be tools to educate investors both in a learning environment and “on the job”; ability to invest with small tickets; access to deals that have benchmarked valuations and terms; mechanisms to leverage the community intelligence and professional deal leadership certification and compensation.

By: Ken Kousky, BlueWater Angels and Krista Tuomi, American University

A number of public policy activities and initiatives that occur in American states are just as important to angel investors as federal-level issues.  The key state issues include tax credits for angel investments, matching co-investments by the state, grants and incentives to angel networks and even state-run venture and angel funds.  Knowing what works remains a critical challenge at both the state and national level requiring that we organize and support our interests in both arenas.

Our last blog post analyzed some international matching grants, highlighting in particular the well-designed New Zealand and Israeli programs. This blog examines four types of public offerings in the US. 

By Bill PayneFrontier Angel Funds

The median pre-money valuation of seed stage deals has increased since 2010, as the US economy has emerged from the recent recession.  The following table shows the pre-money valuation of seed stage deals from several sources over the past five years:

By: Ken Kousky, BlueWater Angels and Krista Tuomi, American University

The Angel Capital Association has played an important role in shaping the most vital public policy issues that affect angel investment practices ranging from the implementation of the JOBS Act to the definition and verification of accredited investors. While meetings with the SEC and Members of Congress have been vital for ACA members, political actions at the state level are just as important.

The key state issues include tax credits for angel investments, matching co-investments by the state, grants and incentives to angel networks and even state-run venture and angel funds.  Knowing what works remains a critical challenge at both the state and national level requiring that we organize and support our interests in both arenas.

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."

A few weeks ago, I spoke to MBA candidates at a business school conference. They were passionate about becoming entrepreneurs and were in the process of refining prototype products. Yesterday, I met with another aspiring entrepreneur – a corporate veteran with a product, a patent and a launch plan. Despite the obvious differences in career and product development timing, the students and the corporate veteran shared common traits: they were passionate about their ideas, dreaming big and determined to perfect their investor pitches.

By Michelle Stewart and George Willman, of Reed Smith LLP

Traditionally, investors have selected between two main modes of accomplishing early-stage financing – direct issuance of equity or convertible debt.  There have been some changes over time, such as the increasing proportion of early-stage financings using convertible notes, and increased investor demand for better economics in the notes, with features such as valuation caps and discounts to conversion. However, for a long time, early-stage investments were generally limited to these two modes of financing without a lot of fundamental change. 

Recently, several new approaches have emerged, which have generated quite a bit of interest in the early-stage financing community.  These include SAFE (Simple Agreement for Future Equity), KISS (Keep it Simple Security), and Series Seed. SAFE, proposed by Y Combinator, and KISS, proposed by 500 Startups, were quickly adopted by companies coming out of these well-known accelerators.  But the use of, and interest in, these new approaches reaches beyond these portfolio companies to other emerging companies looking for something different.  The Wall Street Journal highlighted this trend recently in “Startups Offer Unusual Reward for Investing - Simple Agreement for Future Equity promises benefits later if the firm is able to move forward,” April 1, 2015.

Subscribe