Angel Insights Blog

Editor’s Note: Syndication is one of the topics that remains at the forefront of many angel group priority lists—and for good reason—syndication is a critical component of angel investing success. When we look back 5+ years since ACA held its first collaboration committee meeting, established with the goal of improving syndication best practices across the nation, we can revel in how far we’ve come: From the leading syndication practices of some geographies like what we’ve seen in New England (which led to developing the ACA Syndication Guide in 2009), to the steady increase in angel group co-investing which for 2012 included 70 percent of deals evidenced by data in the 2012 HALO Report, we can pat ourselves on the back for the progress we’ve made. But despite this progress, there is more work yet to be done to tailor and refine practices to the differing needs across distinct angel groups, industry sectors, and geographies.

Below, Dick Reeves, ACA Board Member & Executive Director of the Huntsville Angel Network shares his personal views on the challenges and opportunities left to overcome in his realm.

This post was written by Jean Peters, ACA Board Member and Managing Director of Golden Seeds.

If the SEC takes advice it solicited at last fall’s annual government-business forum, accredited investors who are part of an angel group or network may enjoy a “safe harbor” when investing in a company that uses general solicitation to attract funds.

Under Title II of the Jumpstart Our Business Startups Act (JOBS Act), in order to claim the exemption while employing general solicitation, issuers must “take reasonable steps to verify” that all ultimate purchasers meet the accreditation standard.

This post was co-written by David Verrill, ACA Chairman and Founding Manager and Partner of the Hub Angels, and Rob Spalding, Senior Advisor with Alternative Solutions Group, a self-directed retirement account consulting firm.

In the world of angel investing it is critical to know all the tools available for managing risk, creating value, and also addressing tax efficiency if possible. One of the most under-utilized tools for angel investing is a self-directed retirement account such as an IRA or 401(k). Many angels are just learning that private equity and private placements such as angel funds can be held in these accounts tax-deferred or tax-free. Hub members have been using this mechanism in the Hub funds for nearly 10 years, and we have five people in our current fund investing through self-directed IRAs.

This post was written by ACA Board Member, Catherine Mott.

What is happening behind the scenes in Washington? Could angel investors be cut off at the knees? Will the number of net job creators be cut to 1/3 of its current count?

Most of us are aware of the background: Section 415 of the Dodd-Frank Act (2010) required that Congress study criteria in 2013 to determine whether changes should be made to accredited investor definitions. This might include raising the financial thresholds (or recommending other criteria) to qualify for accredited investor status for eligibility to invest in private placement securities.

This post was written by Joseph W. Bartlett.  To read the original post, click here.

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

I had the pleasure of listening to Frank Peters interview Liz Marchi, coordinator of the Frontier Angel Fund in Montana, last weekend. The podcast interview was fun, as Frontier Angels had two exits in late 2012 – great for the entrepreneurs, investors, and the angel group itself. Or as Liz puts it “everyone understands the ‘do good’ part of angel investing, but it is great to ‘do well’ so I can invest again… It’s really fun to put capital in to build companies.”

Here’s information on the two exits:

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, features a new post from his blog, ScratchPaper.  To read the original post, click here.

There’s a massive amount available on the interwebs on how to improve the odds for success in new ventures. But almost nothing concrete is available on the care and feeding of your investors. You can do all of the Lean Startup experimentation you want, but we’re here to tell you that one of the the easiest and most underrated skills that a startup CEO needs is knowing how to keep your investors updated, excited and engaged.

This post was written by Bill Payne in conjunction with Angel Capital Association.

Much like the real estate market, the starting point for determining the valuation of seed stage ventures is comparable deals. At what valuation have similar deals at the same stage, in the same business segment and in your region been funded recently? Knowledge of local recent transactions is key to establishing the valuation of the target company. And, it is important to acknowledge that the valuation of startup ventures changes with competition (lots of capital chasing deals in a given business sector increases median valuations) and with the business cycle (angels are less likely to open their pocketbooks during a deep recession, driving down valuations).

This post was co-written by John May and Wendee Wolfson, co-hosts of the 2013 International Exchange at the 2013 ACA Summit.

This year’s International Exchange (IE) at the ACA Summit, was comprised of 120 leading angels from around the world to exchange ideas, discuss challenges, and broaden their global networks. The 100%+ growth in attendance year over year and participation from 25 countries on 6 continents demonstrates a growing appetite for cross-border collaboration.
Below are highlights on some of the key topics from the sessions:

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, features a new post from his blog, ScratchPaper, that discusses angel investment decisions, and whether it is best to jump on the bandwagon or swim against the tide.  To read the original post, click here.

So the other day I’m chatting with a new angel about a very large round that had lots of momentum – it had been expanded and was still over-subscribed. Classic case, driven by the usual factors: little bit later stage with some traction, so risk is perceived as lower, great pitch by an appealing CEO, backed by a seemingly good team, momentum in the round building quickly, a product people can understand that is already built and in the stream of commerce, and, perhaps most importantly, a perception of scarcity as the round filled up.