Angel Insights Blog

By: Marianne Hudson, ACA Executive Director

The Securities and Exchange Commission has recently provided three written statements that provide clarification and/or insight into their thinking on different aspects of general solicitation in Regulation D offerings.  I encourage angel investors and entrepreneurs alike to read these SEC materials and discuss them with your legal counsel.

Two of the writings are “Compliance and Disclosure Interpretations” (kind of FAQs) published on August 6 and the other is a “no action letter” written on August 3.  Let’s take a look at each, with my quick interpretation and then the actual language from the SEC:

By: Adam Quinton, Founder/CEO Lucas Point Ventures and ACA member (Astia Angel)

This post originally appeared on LinkedIn

When early stage investors conduct their due diligence we all have our own set of criteria and benchmarks, some objective. Many not!  This can be rather frustrating for founders because a lot of the dialog with investors, as a result, is an inefficient one on one dialog.

But before getting to the details of due diligence that matter to "us" what is the appropriate stance for investors to adopt as they undertake due diligence? What you might call a philosophy of due diligence. As you will see for me that means treating the real risks takers with respect. (Hint: investor risks are, in the round, pretty modest.)

By: Marianne Hudson, ACA Executive Director

I want to let you know about ACA's participation in the first ever White House Demo Day, which is focused on inclusive entrepreneurship.  There will be success stories about entrepreneurs from different geographies, ages, races and genders in an event this afternoon.  The press release explains more details. 

A part of the program is for private sector organizations to commit to growing inclusive entrepreneurship and ACA made a commitment that is mentioned about a quarter of the way into the document.  Our commitment is to do our first ever study on the demographics of angel investors and why they make investments to have a baseline of women and minorities as angel investors and to share best practices of investing. This study will begin this Fall and is supported by the John Huston Fund for Angel Professionalism. 

By Krista Tuomi, Associate Professor, American University

Editor’s Note:  As businesses start and grow it is important to think through the best kind of financing for the business.  Entrepreneurs can talk with a variety of business coaches and counselors for advice and information, and may also approach angel investors as they mentor startups in their communities.  Angels need to stay on top of the news about commercial loans and other kinds of financing to help build the success of the startups they support. Some experts say that bank loans are the dominant source of finance for young firms, with as much as 40% of all initial startup capital, although this information may be dated.  Dr. Tuomi takes a look at the current state of bank loans for startups and questions whether this is still the case.

Bank loans are appealing to startups who fear loss of control/equity in their venture. 

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

Every angel portfolio needs some real gems to provide an overall return.  Selecting which companies to add to your angel portfolio sometimes feels like hunting for an elusive pearl among thousands of oysters. So many look the same from the outside. Are there telltale signs that point to which oyster contains the pearl without having to pry open every one?

ACA is pleased to join small business advocacy associations in supporting the new Small Business Tax Compliance Relief Act, sponsored by US Senator David Vitter, of Louisiana.  Sen. Vitter, who chairs the Small Business and Entrepreneurship Committee, aims to promote a fairer tax code for American small businesses and entrepreneurs and promoting US job growth.  The act includes 17 different tax and regulatory benefits for small businesses, covering health insurance, IRS regulations, and 409A deferred compensation packages, among other things.

ACA started its new membership year on July 1, and along with that came a changing of the guard in chairmanship.  Our association has been blessed with great leadership from our Board of Directors, especially from our Chairs.

These men and women have put in more hours than our members know to make sure ACA is strong and delivering value to our member angels, and with no financial reward.  David Verrill has been one of the best Chairs.  He goes to emeritus status with ACA in great shape, and hands the reins to Christopher Mirabile – who is already showing his excellent leadership abilities.

Angel investing groups provide a considerable power to angel investors, which carries over to entrepreneurs and our startup economy.  I particularly like the powers of portfolio diversity, the right people and size. 

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.