This post was written by David S. Rose.  To read the original post, click here.

It’s true, but…

Starting a company is NOT at all easy, and unfortunately there simply is no way toreally learn about it other than by doing it. No book, school, mentoring, or even apprenticeship can substitute for hands-on experience. When you consider that doctors spend a minimum of two years in pre-med, four years in med school, one year in internship, and two years in residency before you would consider putting yourself in their hands, think about how investors feel putting hundreds of thousands, or millions, of dollars into the hands of a startup team with no experience. Isn’t creating a viable company at LEAST as difficult as treating a patient? [Hint: Yes!]

Even barbers have to have at least two years’ experience and pass a rigorous state licensing exam before they can work on their own…and as the old saying goes, “I’d prefer that you learned to shave on someone ELSE’S whiskers!”

Last week the Securities and Exchange Commission approved two rules and one proposed rule that will change how entrepreneurs raise angel capital and may make investment more difficult for angels and startups alike. We think fewer angels will invest as a result, unfortunately hurting the startups that create jobs throughout the U.S. 

The issues are complex, but here is a quick summary:

1. The SEC is lifting the ban on general solicitation for startups raising capital under Regulation D Rule 506(c) – as required in last year’s JOBS Act – and providing rules on how issuers take “reasonable steps to verify” that all investors are accredited.

Here’s the important thing for you to understand: for solicited deals, angels will no longer be able to self-certify their accredited status. Instead issuers will need to verify accredited status with “safe harbor” categories such as providing the issuer a copy of your W-2, tax filing, or brokerage statement or a third-party (attorney, accountant, or registered investment advisor) certifies that you are accredited. Investors who have previously invested in an issuer will be grandfathered in additional investments in that particular company. The published rule is here.

This post was co-written by John May and Wendee Wolfson, co-hosts of the 2013 International Exchange at the 2013 ACA Summit.

At this year’s International Exchange, we asked five of our most experienced angels from around the world to help us do some “myth-busting.“ Jordan Green, chair of the Australian Association of Angel Investors; Claire Munck, former Managing Director of EBAN and current Board Member of Belgium’s BE Angels; Fernando Prieto, Chairman of Chile’s Southern Angels; Luigi Amati from Meta Capital in Milan, Italy; and Ross Finlay, ACA Board Member and co-founder of First Angel Network Association of Canada, provided their perspectives on whether some of the most common assumptions in angel investing still hold true.

Assumption #1: Distance matters for mentor capital. While historically, angel investing has been very local, syndication across groups has become more common within countries and there is also a growing interest in cross-border investing between countries. Can it really work? Is it possible to make it profitable, or should angels stick to their own locations? Early stage investments still benefit from having a local mentor and deal lead who can be present to help and to monitor the company on a regular basis. If angels want to invest beyond their own geographies, they should develop their networks, get to know other angels, and learn about their investment experiences and guiding principles.

Brian Cohen is an ACA member and the Chairman of the New York Angels, the most active angel group in North America. He co-founded Technology Solutions, Inc. in 1983 with his wife, which he later sold to the McCann Erickson World Group, becoming Vice Chairman of their technology group. As a publisher, Brian helped found a number of computing publications, including Computer Systems News & InformationWeek. As an investor with the New York Angels, Brian has invested in dozens of early stage technology companies. Most recently, Brian co-authored the book, What Every Angel Investor Wants You to Know.

We recently spoke with Brian to hear more about his outlook on angel investing and the broader entrepreneurial community, and we wanted to share the discussion with our readers below.

Editor’s Note: Syndication is one of the topics that remains at the forefront of many angel group priority lists—and for good reason—syndication is a critical component of angel investing success. When we look back 5+ years since ACA held its first collaboration committee meeting, established with the goal of improving syndication best practices across the nation, we can revel in how far we’ve come: From the leading syndication practices of some geographies like what we’ve seen in New England (which led to developing the ACA Syndication Guide in 2009), to the steady increase in angel group co-investing which for 2012 included 70 percent of deals evidenced by data in the 2012 HALO Report, we can pat ourselves on the back for the progress we’ve made. But despite this progress, there is more work yet to be done to tailor and refine practices to the differing needs across distinct angel groups, industry sectors, and geographies.

Below, Dick Reeves, ACA Board Member & Executive Director of the Huntsville Angel Network shares his personal views on the challenges and opportunities left to overcome in his realm.

This post was written by Jean Peters, ACA Board Member and Managing Director of Golden Seeds.

If the SEC takes advice it solicited at last fall’s annual government-business forum, accredited investors who are part of an angel group or network may enjoy a “safe harbor” when investing in a company that uses general solicitation to attract funds.

Under Title II of the Jumpstart Our Business Startups Act (JOBS Act), in order to claim the exemption while employing general solicitation, issuers must “take reasonable steps to verify” that all ultimate purchasers meet the accreditation standard.

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

At GUST’s June 17-18 Venture Forward Conference in New York City I enjoyed being a panelist with David Hornik (August Capital) and Bob Rice (Bloomberg’s alternative investment expert and The Alternative Answer author). Dave represented the top echelon of VC firms; Bob pointed out how few of Dave’s brethren share his success.

Our discussion surfaced how vastly the exit expectations of my angel group (Ohio TechAngels) differ from those of the top tier VCs. We are delighted to reap smaller returns (3 – 10X) if they consistently occur before five years. I explained that during our 9 ½ years of investing, we have always presumed our liquidity events would occur via an M & A event, never an IPO. We focus on how we can help our entrepreneurs orchestrate their sale, which we view as the ultimate alpha builder.

This post was co-written by David Verrill, ACA Chairman and Founding Manager and Partner of the Hub Angels, and Rob Spalding, Senior Advisor with Alternative Solutions Group, a self-directed retirement account consulting firm.

In the world of angel investing it is critical to know all the tools available for managing risk, creating value, and also addressing tax efficiency if possible. One of the most under-utilized tools for angel investing is a self-directed retirement account such as an IRA or 401(k). Many angels are just learning that private equity and private placements such as angel funds can be held in these accounts tax-deferred or tax-free. Hub members have been using this mechanism in the Hub funds for nearly 10 years, and we have five people in our current fund investing through self-directed IRAs.

This post was written by ACA Board Member, Catherine Mott.

What is happening behind the scenes in Washington? Could angel investors be cut off at the knees? Will the number of net job creators be cut to 1/3 of its current count?

Most of us are aware of the background: Section 415 of the Dodd-Frank Act (2010) required that Congress study criteria in 2013 to determine whether changes should be made to accredited investor definitions. This might include raising the financial thresholds (or recommending other criteria) to qualify for accredited investor status for eligibility to invest in private placement securities.

This post was written by Joseph W. Bartlett.  To read the original post, click here.

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

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