Trends

By: William Carleton, Counselor @ Law, and volunteer chair of ACA Public Policy Advisory Council

Don't look now, but entire development teams, with significant experience (2-3 years+) working together, are leaving giant tech companies to found startups.

If 20 years ago the archetype was two renegades in a garage with an idea and the will to figure stuff out, today's paradigm is six or seven developers and a political savvy business leader (or two, or more) who have learned to trust one another and work effectively as a unit. All courtesy of the experience of shipping products for a well funded, publicly traded company.

By: Marianne Hudson, ACA Executive Director

Ever wonder how your investment activity and background compares to other angels in the US?  Take The American Angel survey to put in your information and get early access to detailed reports to learn more. 

ACA is partnering with Wharton Entrepreneurship to develop the first ever large dataset of US angel investors to understand who angels are demographically, how they became angel investors, how angels make decisions, and what level and type of investment activity they have.  The project should benefit angels as an asset class as it brings more visibility to angels, supports a stronger early-stage investing environment, and lead to better public policies to support angel investing and innovative startups.  It just might refute a lot of assumptions about angel investors that are incorrect.

While I was doing some research about some of our ACA Summit speakers, I found that several have penned some really interesting pieces.  Angels and entrepreneurs can learn a lot about investing trends and key trends and issues in early stage investing.  Here is an incomplete list of articles to check out:

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: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

Entrepreneurial finance has changed more in the last five years than the previous 100. The evolution is coming so quickly these days that it almost feels like the opening credits of the Big Bang Theory television show.  It may be, though, that 2016 speeds up the changes an innovations.  I can’t think of a more exciting era for angel investors.

So what does this all mean and what should we be on the lookout for? As the New Year begins, here are my top themes and questions for how the rapidly evolving world of entrepreneurial finance may impact angel investing:

By: Marianne Hudson, ACA Executive Director

Angel group valuations and deal sizes are on a huge growth trajectory according to the HALO Report through the third quarter of 2015.  The report, released today by the Angel Resource Institute at Willamette University, shows the median seed stage valuation at an all-time high of $4 million, a 33 percent increase over 2014.  Some of this is reflected in median round sizes, which more than doubled in one year - $350,000 in Q3 2014 to $725,000 in Q3 2015.

These increases are a really big deal for the angel group community, and I hope that these trends reverse themselves soon.  As ARI’s Vice Chairman of Research Rob Wiltbank said, “This report reinforces the trends that we have been reporting on for the past several quarters, particularly the rise in all round sizes and pre-money valuations. These trends have a significant impact on the way that angels and entrepreneurs plan for the future when raising capital.”

By: Marianne Hudson, ACA Executive Director

Last Friday, November 13 was an extraordinary day for angel investors across the globe:  during the first ever Global Angel Investing Forum a new book on angel investing was released, with chapters written by investors in 27 countries.  Angels without Borders: Trends and Policies Shaping Angel Investment Worldwide was released during the forum event in Beijing with many of the authors in attendance.

By Krista Tuomi, Associate Professor, American University

European crowdfunding laws and experience provide some background on how crowdfunding might work in the US. One of my earlier blogs dealt with some implications of equity crowdfunding for angels, drawing on the experience of Sweden and the UK. It highlighted some concerns about crowdfunding, particularly the low success rates for complex products and those that require follow on financing.  Despite tax and co-funding sweeteners, repeat investment has been low.  Only 17% of Swedes crowdfunded more than once, slightly lower than the 24% reported by a Scottish Crowdcube survey.  Another oft-mentioned concern is that “naïve” investors will get burned, leading to regulatory backlash.  Recent events in Germany may be a test case of this.

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. 

Seventeen states and the District of Columbia now allow non-accredited investors to invest in startups located in their state. As more states follow suit, it is useful to look at data detailing other countries’ experiences. Both the UK and Sweden have experimented with “equity crowdfunding” for non-accredited investors for a number of years now. Their experiences so far have been interesting, as have the implications for the UK and Swedish angel communities.

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Tapping into America’s Biomedical Seed Fund by Ethel Rubin  on  February 12
The Seraf Method to Valuing Startups: Exit Practicalities by Ham and Christopher LM  on  January 16