Angel Investing

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. 

By: Bill Payne, Frontier Angels

The popular press has been hyping crowdfunding since the JOBS Act passed in 2010.  The Huffington Post tells us that the #1 Losers of the JOBS Act is Angel Investors!  AngelList and Kickstarter (and their facilitated companies) are getting considerable attention and Lending Club had a huge IPO in December.  Just how large is this crowdfunding movement in the US?  And, how is it impacting seed stage and early stage investing which has been dominated by angels for the past several decades?

During the past several months, I have been on a mission to quantify the several types of crowdfunding, both in the US and the rest of the world.  We hear crowdfunding exceeded $10 billion worldwide in 2014.  But, how much of that was equity crowdfunding?  In the US, all equity crowdfunding is accredited investor only.  What can we learn from Europe about the quantity of unaccredited investor (public) crowdfunding, compared to all other crowdfunding? 

Sometimes new regulations create the need for market leaders to adjust, so that efficiencies for all can continue.  One such example is a set of rules set by the Securities and Exchange Commission for “generally solicited” offerings.  The rules – or really the market interpretation of the rules – have created so much confusion that the Angel Capital Association decided to develop a certification program for part of the angel market, angels who invest through angel groups, so that angels and entrepreneurs can actually do generally solicited deals.

When Congress passed the JOBS Act in 2012 they allowed for the very first time the ability for entrepreneurs to raise equity capital by advertising rather than through existing relationships in private.  Fearing fraud, Congress also required that companies take “reasonable steps to verify” that investors in these deals are accredited investors and asked the SEC to set the detailed rules.  The SEC’s rules said that copies of income or wealth documents or certifications by accountants and lawyers would work, as would a complicated set of methods that look at the facts and circumstances of the deal.

By: Marianne Hudson, ACA Executive Director

The reality show “Shark Tank” has become one of the most popular programs on television and has helped the wider public hear the term “angel investor” and grasp what they do.  And likely the Sharks have invested in and coached many entrepreneurs, helping those companies become successful.

But I really liked a news article last week - “Dallas Health Startup Investors Are Angels, Not Sharks” - because it distinguished many angel investors from the maneuvering and other drama that happens on the TV show.  In my opinion, the article nailed it:

By: Marianne Hudson, ACA Executive Director

ACA is aimed at providing the best information and resources for our member angels and the startup community. As we begin what we hope is a fantastic year for investors and entrepreneurs alike, we share 32 of the best articles, blogs and books in our field from 2014 to help you build your own libraries.

By: Marianne Hudson, ACA Executive Director

Last week, President Obama signed the Tax Increase Prevention Act, which includes several benefits for small businesses and also a benefit for angel investors. We want to get this information out to you, as this benefit relates to investments made in 2014 (retroactively and through December 31).

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock (also known as “Section 1202”) and this new law effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply. If you are interested in this program, PLEASE TALK TO YOUR ACCOUNTANT to ensure you have all the information you need to structure your investments to meet all requirements.

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."

If you’re a startup founder, you probably have an investor-ready answer to the question, “Who are your competitors?” Your biggest competition isn’t always the industry heavyweight identified in your competitive analysis. Sometimes, a stealthy competitor shows up instead in your sales pipeline - as the prospect’s decision to do nothing. Is the status quo your competitor?

Competition from the status quo can surface at any time during your business development activities.  In a conversation with a prospect, the status quo is often expressed as “Thanks, we’re all set.”   If you’re hearing repeated requests for more information, long after you thought the prospect was purchase-ready, it’s the status quo again.

Many in the world are waking up to the huge importance of entrepreneurs – who create high quality jobs and innovations that change people’s quality of life.  Entrepreneurs, investors, incubators, universities, and a wide variety of community leaders have known about this for a long time, but now the public and elected officials are also seeing it.

They’re also celebrating entrepreneurs and now angel investors in a series of events, proclamations, articles and other programs:

  • Global Entrepreneurship Week – “GEW,” which is all this week, is the world’s largest celebration of entrepreneurship and is the innovators and job creators who launch startups that bring ideas to life, drive economic growth and expand human welfare.  During one week each November, GEW inspires people everywhere through local, national and global activities designed to help them explore their potential as self-starters and innovators. These activities, from large-scale competitions and events to intimate networking gatherings, connect participants to potential collaborators, mentors and even investors—introducing them to new possibilities and exciting opportunities.

  • Global Business Angels Day – The first ever “GBAD” (I’m still thinking on that acronym) is a part of GEW, aimed at highlighting the role that business angels play in helping new firms start and scale – driving innovation, jobs, and economic growth around the world.  ACA and our colleague angel associations all over the world are part of the celebration – including Canada, Europe, Middle East and Africa.

By: Christopher Mirabile, ACA Board and Launchpad Venture Group

This post originally appeared on Inc.com

If you can’t describe what a great mentor does, you’ve probably never had one.  A great mentor relationship is actually a pretty rare and special thing.  It doesn’t come about all that often, and it’s not something that can be forced.  But it is worth trying to find one or more if you can, because having great mentors can be so powerfully helpful. 

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

Dave Berkus is one of the most successful angels I know.  He has made 108 investments in early-stage companies and has an IRR of 97 percent.  Dave is a special case – he is a top speaker, expert in corporate governance, and has a valuation methodology named after him – even so, are there insights smart angels can pick up from this Los Angeles-based investor?

What is it about Dave that makes him that good? More to the point--are there traits we can emulate from successful angels like him?

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