Investing Best Practices

By: Matt Dunbar, co-founder of the South Carolina Angel Network and managing director of the Upstate Carolina Angel Network.

This post originally appeared in Upstate Business Journal.

On Father’s Day weekend, I indulged a bit in watching the last round of the U.S. Open golf tournament and the last game of the NBA Finals. My lovely wife, who doesn’t exactly share my interest in sports (other than college football), opined that she found the sports to be boring — except right at the end when you find out who’s going to win.

By A.J. Watson of Fundify, LLC in Austin, TX.  This article originally appeared on Medium.com

Summary: The majority of angel investments are made by investors with no prior industry experience. This is a problem since one of the best indicators of investment success is the investor’s past experience. If you are an angel investor, you should seek to invest in industries where you have experience OR invest alongside investors with prior experience. I believe so strongly in this fact that I’m helping build Fundify.com, a community of industry experts, to help.

By: Marianne Hudson, ACA Executive Director

Are you an accredited angel investor?  We need ten minutes of your time to make a big difference for startup investing.  Please take this confidential survey to help us understand who angel investors are, how they became angels, and what factors influence their investing activity.

Today ACA and Wharton Entrepreneurship announced a partnership to complete the first-ever comprehensive demographic study of angel investors across the U.S.  We believe this study will help identify characteristics of angel investors that have never before been understood. It is critical for entrepreneurs, economic development entities, private market makers, regulators and legislators to understand who angel investors are, in order to drive effective policies to ensure a robust angel investing marketplace and for startups to better access equity capital.

By: Christopher Mirabile, ACA Chair and Launchpad Venture Group

This post originally appeared on Inc.com

There are many options – and traps, when it comes to financings. We’ve talked about the virtues of priced rounds relative to convertible debt, as well as the key concerns of founders in approaching financings.  However, one of the most fundamental considerations is the question of valuation.

When it comes to pre-money valuations, higher is always better, right? This is certainly a common misconception held by many entrepreneurs. Here’s why it’s wrong.

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?

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