Angel Insights Blog

By: Ed Cox, CEO of everyStory

The stages of funding, it is said over and over, go as follows: friends and family, then angels, then venture capitalists. It’s a familiar framework to any entrepreneur trying to launch a startup.

However, should every entrepreneur trying to raise money assume that oft-repeated path is actually the best path? Absolutely not. Entrepreneurs should not determine their companies’ sources of funding based on tradition or assumptions. Rather they should base them on the intention and goals of those companies.

In fact, entrepreneurs should stop thinking of funding in “stages” altogether. What’s listed above are funding “avenues” that should be considered simultaneously – and could also be pursued simultaneously. In a world of rapidly developing crowdfunding sources, the way to raise money has expanded well beyond those customary staples.

By: Marianne Hudson, ACA Executive Director

Today we send a special congratulations to our sister organization, the Angel Resource Institute, which is now the Angel Resource Institute at Willamette University.  ARI and Willamette University have developed this new joint venture, which should be a good result for ACA members, and angels and entrepreneurs in general.  More information about the joint venture is here.

As ARI Chairman, Michael Cain, said, “There is a natural fit between our two organizations. This partnership allows us to provide better service, enhance our research, and expand our training offering.”

By: Marianne Hudson, ACA Executive Director

ACA members are getting very good at working together to fund interesting deals.  The latest example:  six member groups from literally all corners of the US were part of a $12 million series B financing.  The investment in Cognition Therapeutics was led by Golden Seeds (New York and many cities), and included ACA members Cowtown Angels (Fort Worth), Maine Angels, PLSG Accelerator Fund (Pittsburgh), Tech Coast Angels (Southern California), and Ariel Southeast Angel Partners (Savannah), as well as additional life sciences investors.  Cognition Therapeutics (CogRx) is focused on discovering and developing disease-modifying therapies for Alzheimer’s and related neurodegenerative diseases. Read the full press release below for all the details.

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.

By: Marianne Hudson, ACA Executive Director

This post originally appeared on Forbes.com

A new buzzword in entrepreneurship and equity investing is “inclusiveness.”  It is gaining traction with Venture Capitalists and angels alike, who see that building the diversity of the investor community and the entrepreneurs they invest in is not only a good societal goal, but it is also a way to build great deal flow, make better investment decisions, and grow returns.

What has many investors scratching their heads, though, is: how do we do become more inclusive?  Think about it.  Do you often go outside your social network to bring in co-investors or entrepreneurs who are different from you?  Most likely the answer is no.  You probably stick with the core people you know or are like you.  Research backs this up for most investors.  But “sticking to your knitting” may be limiting your options and leaving some money on the table.

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, TX.  The 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. 

By: Marianne Hudson, ACA Executive Director

The Securities and Exchange Commission has recently provided three written statements that provide clarification and/or insight into their thinking on different aspects of general solicitation in Regulation D offerings.  I encourage angel investors and entrepreneurs alike to read these SEC materials and discuss them with your legal counsel.

Two of the writings are “Compliance and Disclosure Interpretations” (kind of FAQs) published on August 6 and the other is a “no action letter” written on August 3.  Let’s take a look at each, with my quick interpretation and then the actual language from the SEC:

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

I want to let you know about ACA's participation in the first ever White House Demo Day, which is focused on inclusive entrepreneurship.  There will be success stories about entrepreneurs from different geographies, ages, races and genders in an event this afternoon.  The press release explains more details. 

A part of the program is for private sector organizations to commit to growing inclusive entrepreneurship and ACA made a commitment that is mentioned about a quarter of the way into the document.  Our commitment is to do our first ever study on the demographics of angel investors and why they make investments to have a baseline of women and minorities as angel investors and to share best practices of investing. This study will begin this Fall and is supported by the John Huston Fund for Angel Professionalism.