By: Ken Kousky, angel investor, Executive Director of BlueWater Angels (Midland, MI), and member of ACA’s public policy committee. We invite you to get to know Ken and other ACA members via this periodic feature. If you have a great idea for a member profile, please contact Sarah Dickey.

How and when did you get involved in angel investing?
I have been making angel investments since the 1980s before we called it angel investing. My company, Cache Data Products, was acquired by Novell when they went public. While I continued to work for Novell, I had the opportunity to meet and support startups that were in our networking infrastructure space. Most needed seed capital.

By: Elizabeth Hess, CFO at TRX Systems, an ACA member portfolio company that provides algorithms and products that deliver location indoors and underground, in areas where GPS is unreliable or unavailable. Elizabeth shares her thoughts about the potential change to the accredited angel definition based on her experience with angel funding at TRX and other entrepreneurial companies.  

The potential re-definition of Accredited Investors would drastically reduce the number of angel investors, barring many from participating in backing new ventures. This is of great concern to those early stage investors, and an even greater concern to the entrepreneurs who rely on them.

Early stage financing is the most difficult to obtain but it is the basis for everything. Entrepreneurs may do technical research, talk to customers, validate the market, and flesh out key elements of a business plan- but to progress beyond the “slideware” phase, they must hire employees and start the actual development work. Employees reasonably look for some indication of viability before signing on, both from a financial standpoint and a technical standpoint. Angels are willing to invest at this stage, before there are any real proof points, because of their background and experience, their ability to dive deep during due diligence, and to make an informed decision to invest. The angel investor provides both the funds to bring people on and the assurance that there has been some validation of the business concept.

By: Marianne Hudson, ACA Executive Director

Last week, Scott Shane wrote a column in, Would a Higher Accredited Investor Threshold Clip Angels’ Wings? While the answer to that question to me is obviously “yes”, Scott concluded “data on the angel capital market’s response to the 2010 increase in the (accredited investor) threshold doesn’t support that view.”

I’ve read his column and traded an email or two with him since, and I have to say, Pardon Me?

By: Angela Jackson, Portland Seed Fund

The largest ever ACA Regional Meeting took place June 3-5 in Portland, OR. Angels from Nevada to Alaska discussed emerging data and deal flow trends for angels, syndication, helping portfolio companies in crises, and celebrating exits, among other topics. In addition to interactive sessions, 20 companies from throughout the region presented investment opportunities. Event host Angela Jackson, Managing Director of the Portland Seed Fund, provides insights into the fun work of creating and hosting this important regional event - by angels for angels.

It was a crazy notion, that we could entice 100 people to travel to Portland, Oregon on short notice for an ACA regional angel meeting.

Yet, with enticements like a beautiful, walkable, transit-friendly city, a foodie's dilemma on every corner (Food cart or farm-to-table? Craft brew or Willamette Valley Pinot?) we thought we had a shot.

An Interview with: Michael Bolick, Selah Genomics CEO

It is fair to say Selah Genomics CEO, Michael Bolick, knows a thing or two about angel investment. As a serial entrepreneur with 25 years of experience in the life science and healthcare industries, Bolick
most recently sold Selah Genomics to EKF Diagnostics, fifteen months after leading a management buyout of Lab21 Ltd’s US-based operations. Prior to co-founding Selah Genomics, Michael served as President of Lab21 Inc., which was formed following Lab21 Ltd’s acquisition of his prior company, Selah Technologies LLC in 2009. Bolick founded Selah Technologies LLC in 2006 to commercialize healthcare focused nanotechnologies licensed from Clemson University.  Investors include ACA member Upstate Caolina Angel Network.

How did angel investment affect Selah Genomics?
Angel investment was instrumental to our success. We completed a management buyout in December 2012 and our angels invested in the summer of 2013. We were blessed with the opportunity to leverage those funds and rapidly move our business into fast growth mode and profitability, which led to the acquisition.

By: Bill Payne, Vegas Valley Angels and Frontier Angels

This blog post originally appeared on

The sale of equity in private companies is regulated by the Securities Act of 1933, which requires that the company either register with the SEC or meet one of several exemptions (Regulation D). A Private Placement Memorandum (PPM) is a special business plan defined to meet an SEC exemption. In most cases, those entrepreneurs choosing to raise capital using PPMs retain specialists (many of whom are lawyers) to write their PPMs – a rather expensive undertaking. I don’t fund new companies that have prepared PPMs for investment. I am an angel investor, that is, an accredited investor who is assumed by the SEC and others to be sufficiently wealthy to afford to lose the investment and supposedly experienced enough to make good choices on fundable companies. Angels, as group of accredited investors funding startup companies, are assumed to meet a Regulation D exemption for purchasing equity in private companies.

Like most angel investors, I have preferences for the terms and conditions of investment and intend to negotiate with entrepreneurs on those terms, such as valuation, company structure, the makeup of the board of directors, liquidation preferences and others. I have yet to read a PPM written for a startup company that meets the parameters we angels generally establish for funding new ventures.

By: Matt Dunbar, ACA Board and Upstate Carolina Angel Network

In recent weeks in the Upstate Business Journal, several exciting local startups have made the news for their significant national and international successes: The Iron Yard expanding its code school to cities across the Southeast; KIYATEC winning a rare grant from the National Cancer Institute and being featured at the upcoming BIO International Convention; and Selah Genomics realizing a highly lucrative acquisition by a European diagnostics company.

All three of these companies have relied on local angel investors (including the Upstate Carolina Angel Network) to help provide the risky, early-stage capital required to fund their achievements. They are not alone – across the country last year, more than 70,000 companies raised more than $24 billion from 300,000 angel investors.
But many of those angel investors may be endangered.

By David Verrill, ACA Chairman and Managing Director, Hub Investment Group

The US Securities and Exchange Commission has been tasked (every four years by virtue of the Dodd-Frank Act) to review the thresholds of wealth and income that determine whether or not an individual is accredited “for the protection of investors, in the public interest, and in light of the economy”. The definition of accredited investor hasn’t changed a lot in several decades – a point of fact that has motivated many to say that by virtue of the cost of living increases alone over that time the levels should be roughly doubled to $450,000 in income and $2.5 million in net worth (not including your primary residence). While the logic of math is plausible, these increases address none of the reasons why accreditation should be changed – to protect investors, in the public interest, and in light of the economy. Let’s take a look at each of these.

  • To protect investors. There is almost no fraud in the angel and early stage investment space, so increasing the levels of wealth and income more than likely won’t reduce fraud. I get it that the SEC needs to focus on fraud. They are looking at a broad array of investment types in contemplating accreditation, including VC and PE funds, REITs, hedge funds, etc. Unfortunately there have been some devastating fraud cases in some of those worlds. However, let’s not throw the baby out with the bath water. Let’s address fraud where it exists, not where it doesn’t.

An Interview With: Li Han Chan, DynaOptics

DynaOptics is an innovative startup backed by ACA member group, Sierra Angels who led the investment. Co-founder and CEO Li Han Chan talked to ACA about the importance of angel investing to their business.

Tell us about your business: DynaOptics was founded in 2012. We currently have seven full time employees and offices in Sunnyvale, CA and Singapore. We’re a miniature optics company bringing to market an optical zoom system housed entirely within the slim profile of today's mobile phones. Our technology is able to achieve the performance and manufacturability of today's lens systems, without its bulky footprint.

Describe the impact angel investment has had on your business:

Angel investment was critical for us in at least three ways:

1. Financially – the investment enabled the commercialization of an extremely innovative, high-potential technology. We have utilized the financial resources made available by the Angels to hire full-time engineers dedicated to solving the problems that come with employing this technology in a mass-market product. The resources have also allowed us to actively engage customers to ensure we were solving their critical pain points.

In case you haven’t heard, the SEC will revisit the definition of accredited investor soon and there is a possibility the financial thresholds could be raised so much that 60 percent of all accredited angel investors would no longer qualify to make angel investments. If this happened, this would have a huge impact on the high-growth startups that create the majority of jobs and innovations in this country.

We need angels, entrepreneurs, and all parts of the startup ecosystem to let the SEC know how important it is to keep the angel capital pool large and healthy. ACA has created a set of letter templates and other information so you can easily write the SEC and other policy makers. Check out our “Protect Angel Funding” web page for all details.

At issue is the potential for the SEC to raise the financial thresholds for individual accredited investors for inflation – so net worth requirements could increase from $1 million to $2.5 million and annual income thresholds could grow from $200,000 per to about $450,000. By the SEC’s own estimates, about 60 percent of households would no longer meet accredited investor requirements with the net worth increase alone.