Angel Insights Blog

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

The following is adapted from remarks prepared for the Angel Capital Association's 2015 Angel Insights Exchange, held in New Orleans the week of November 9. Bill is the volunteer chair of an advisory council to the ACA, but the views he expresses below are personal to him, and not a reflection of ACA views or policy.  This post originally appeared on Counselor @ Law.

As we all know, Dodd-Frank (2010) and the JOBS Act (2012) brought big changes to the rules that govern what’s okay and what’s not okay in the world of federal exemptions from securities registration requirements.

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 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

Two years after proposing rules for equity crowdfunding, the Securities and Exchange Commission approved rules for entrepreneurs to raise up to $1 million per year from all investors.  The new U.S. crowdfunding market will officially start in late April or early May of 2016.  The SEC also proposed new rules to modernize crowdfunding within states for public comment during its October 30 meeting. 

Here’s the early “skinny” on the approved rules, noting that they are 686 pages (not a typo):

By Krista Tuomi, Associate Professor, American University

Entrepreneurs often explore a range of funding sources to expand and/or finance working capital, including ‘alternative’ ones such as peer-to-peer (P2P) lending and invoice financing.  These have recently been enjoying media exposure, sometimes erroneously grouped in the same category as angels.  As with my previous blog post on bank loans, this table is supposed to give a rough idea of the advantages and disadvantages of each source.  Such information is useful when advising a firm, or considering investing in one which has already tapped this pool of money (and probably is paying dearly for it).

By: Joseph W. Bartlett, Special Counsel, McCarter & English LLP; Chair Emeritus, ACA Public Policy Advisory Council

Entrepreneurs waste a lot of time soliciting professionally managed venture funds. Venture capitalists operate according to their own largely unwritten rules. In order to play the funding game, you must learn these rules. Below, I’ve listed some of the most-common mistakes. They won’t tell you everything you’ll need to know, but these simple rules should help you understand the VC process and avoid an enormous waste of time, energy, and opportunity.

Rule #1: Choose the Appropriate Audience

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."

In films and on television, characters routinely breeze through sophisticated software, easily cracking codes and accessing just-in-time information. In Jurassic Park, for example, thirteen year-old Lex Murphy reboots the park’s sophisticated computer systems - just after surviving a velociraptor attack in the kitchen. 

In the real world, software applications are not as user-accepted and intuitive. As reported in Fortune, a 2014 a survey of failed startups found that that 42% self-identified the reason for failure as lack of market need for their product.

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: Joseph W. Bartlett, Special Counsel, McCarter & English LLP; Chair Emeritus, ACA Public Policy Advisory Council

The appropriate legal domicile for the company’s organization and filings. In almost every case, Delaware is the appropriate choice. Despite media insinuations, Delaware is not a tax haven. State income taxes are levied on the basis of factors which are not influenced by a Delaware domicile. The reasons for Delaware are practical: The Delaware Secretary of State’s office is better organized and staffed so that the initial organization of a corporation or limited liability company is a matter of a few minutes.

This post originally appeared on Forbes.com

Editor’s Note:  ACA’s annual Fall workshop, now called the Angel Insights Exchange, will be in New Orleans on November 9-10.  We picked New Orleans not only for its iconic activities and food, but because it has a growing entrepreneurial vibrance.  Here’s a taste of the city’s growth in the form of the NO/LA Angel Network.

Despite the devastation Hurricane Katrina caused 10 years ago, the huge disaster that hit New Orleans brought a silver lining. With a giant microscope on the area, young people were drawn to New Orleans and the surrounding region to help.

In the years immediately following Katrina, young people turned out in droves. They came to volunteer, to rebuild and to educate children, but then something interesting happened. Many liked the area and stayed. Their friends came too. Over time all these new NO/LA (New Orleans/ Louisiana) residents perpetuated an explosion of entrepreneurial activity—something the area desperately needed.