Investing Best Practices

By: Dror Futter, Legal and Business Adviser to Startups, Venture Capital Firms and Technology Companies

Remember all those articles about whether venture was overvalued?  With blinding speed, they now seem quaint.

Bluntly stated, most venture-backed companies are in a fight for survival.  Although certain areas of life sciences may do somewhat better, I think the impact will be widely felt.  Complicating the fight is the fact that no one can predict how long it will last and what the immediate post-Corona economy will look like. 

By: Kevin Learned and Denise Dunlap, Boise Angel Alliance

Terms like “warrants, waterfalls and preferences” can be confusing and intimidating when attempting to understand a capitalization table (aka cap table); it is no wonder we are often asked for a simple way to understand them! This article will give a brief overview of why cap tables are important and introduce a simple model to use early in the due diligence process.

By Hambleton Lord, ACA member, managing director of Launchpad Venture Group and co-founder of Seraf Investor.  This blog post originally appeared on the Seraf blog, as part of their “Angel 101” series.

Experience is what you get, when you don’t get what you want. Fifteen years ago, when I made my first angel investment, I wish I knew then what I know today. As a newly minted angel in 2000, I assumed that angel investing would be easy to jump into and become successful at. I was partially right… it was easy to jump into. Unfortunately, it wasn’t that easy to become successful.  

By: Marianne Hudson, ACA Executive Director

Yesterday I took a call from an accelerator managing partner who wanted to educate some of his investors on how to get started in angel investing.  As I put together a list of resources for him, it occurred to me that lots of angel investors and others are interested in this information, so let me share my list here!

This is also a chance to mention that the Angel Capital Association is now starting our new monthly “Best Practice” Webinar series aimed at providing education on the key things new investors need to know:  having a portfolio strategy to begin with, valuation, due diligence, term sheets, sourcing deals, etc.  If you like these, you can also download the decks from the main webinar page.  This program is in partnership with The Rising Tide Fund, Kauffman Foundation, Go Beyond Investing, Portfolia and Next Wave Ventures.  We’ll have more information about this exciting program soon.

By: Marianne Hudson, ACA Executive Director

Recently I had the chance to check in with ACA members in detail on their preferred investment structures.  This all started in June at the ACA Pacific Northwest Regional Meeting, attended by more than 200 investors.  One of my favorite sessions was a debate on deal terms, with Angela Jackson of the Portland Seed Fund arguing for convertible notes and Bill Payne of Frontier Angels speaking for priced rounds.  It was a lively discussion and you could tell the audience was into it. 

By A.J. Watson of Fundify, LLC in Austin, TXThe article originally appeared on Medium.com and provides new analysis on the dataset behind the 2007 study "Returns of Angels in Groups" by Rob Wiltbank. 

At Fundify, we spend a lot of time thinking about and researching what makes a successful angel investor. We find some really interesting data through that process and I’m excited to share it with you. Let’s start with the issue of due diligence.

Spoiler alert: It matters. A lot.

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

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?

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 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:

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