Angel Insights Blog

By Krista Tuomi, Associate Professor, American University

Editor’s Note:  As businesses start and grow it is important to think through the best kind of financing for the business.  Entrepreneurs can talk with a variety of business coaches and counselors for advice and information, and may also approach angel investors as they mentor startups in their communities.  Angels need to stay on top of the news about commercial loans and other kinds of financing to help build the success of the startups they support. Some experts say that bank loans are the dominant source of finance for young firms, with as much as 40% of all initial startup capital, although this information may be dated.  Dr. Tuomi takes a look at the current state of bank loans for startups and questions whether this is still the case.

Bank loans are appealing to startups who fear loss of control/equity in their venture. 

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?

ACA is pleased to join small business advocacy associations in supporting the new Small Business Tax Compliance Relief Act, sponsored by US Senator David Vitter, of Louisiana.  Sen. Vitter, who chairs the Small Business and Entrepreneurship Committee, aims to promote a fairer tax code for American small businesses and entrepreneurs and promoting US job growth.  The act includes 17 different tax and regulatory benefits for small businesses, covering health insurance, IRS regulations, and 409A deferred compensation packages, among other things.

ACA started its new membership year on July 1, and along with that came a changing of the guard in chairmanship.  Our association has been blessed with great leadership from our Board of Directors, especially from our Chairs.

These men and women have put in more hours than our members know to make sure ACA is strong and delivering value to our member angels, and with no financial reward.  David Verrill has been one of the best Chairs.  He goes to emeritus status with ACA in great shape, and hands the reins to Christopher Mirabile – who is already showing his excellent leadership abilities.

Angel investing groups provide a considerable power to angel investors, which carries over to entrepreneurs and our startup economy.  I particularly like the powers of portfolio diversity, the right people and size. 

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. 

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."

As an entrepreneur, your pitch is arguably the most important message about your company’s investment-readiness that you will ever deliver. Most entrepreneurs develop two versions of a pitch: a short, elevator version, and a longer, investor presentation with a slide deck. Your elevator pitch is much more than a compressed investor presentation without the slide deck. It’s a precious few seconds of your listener’s attention in which to communicate your passion, describe your innovative product or service and clarify its value from an investor’s point of view.  

ACA Membership Director Sarah Dickey interviews Jorge Varela as part of a series of profiles of ACA members

How and when did you get involved in angel investing?

I have been actively investing since before the word was popular. I made my first investment more than 15 years ago in TFB Corporation a company in which I later served as CEO.  I am still invested in the company and I am Chairman, but have been able to have two liquidity events and look forward to a third. I was involved in my first startup when I was 21, Braun Systems, which we sold a year later to ITT Systems in 1987.  I then moved to Silicon Valley before all the Valley excitement and became employee number three with VoicePlus, which we took public in a roll-up with Nhanced Technologies. These two early experiences gave me the bug for startups that I have not been able to shake. 

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.

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.