Angel Insights Blog

For those of us living and breathing angel investing day in and day out, it can be hard to remember just how much angel investing has evolved in the past few decades. At the recent ACA Summit, I recounted some of the key shifts in the environment and described the impact this has had on all of us:

30 Years Ago…was when we really started seeing innovation migrate from large corporate R&D labs (largely due to cost cutting) towards early stage ventures that were more nimble at innovating on their own.

Yesterday I was on a conference call with several angel investors talking about public policy two issues that could have a huge impact on angel investors – and really the startups angels support. It strikes me that very few angel investors know these issues, so I’d like to make sure a few more people know about them. Both could change who qualifies to be an accredited investor and make it more difficult for investors to verify their accredited status.

SEC Rulemaking on General Solicitation in JOBS Act

Many of us know about the JOBS Act, passed a year ago to provide more access to capital for small businesses and therefore more jobs. Much of the Act hasn’t been implemented yet because detailed rules need to be set by the SEC. Most of the conversation has been about equity crowdfunding, but there is another issue that may have a much bigger impact on angel funding: how your accredited status is verified.

Christopher Mirabile, ACA Board member and Managing Director of Launchpad Venture Group, featured 3 video interviews from his blog, ScratchPaper, which he conducted at the 2013 ACA Summit.

Dave McClure, founder of 500 Startups.  Dave is a very well-known super-angel and the founder and general parter of 500 Startups, an internet seed fund and accelerator based in Mountain View, California. He’s an engineer and a marketer, working in both roles at PayPal, and has personally invested in 60-70 companies on his own, including some big name companies: Mint, SlideShare, Twilio, Bit.ly, and Jambool. Through 500 Startups, he has done almost another 500 or so more. Here’s what he had to say:

Following our recent 2013 ACA Summit, we decided it’s a good time to take a step back and consider the accomplishment: This year boasted the largest worldwide gathering ever of accredited angel investors. With over 660 attendees from 27 countries, the event was buzzing with talk of deal flow, innovation, and job growth. Takeaways from ACA Chairman David Verrill are captured in this brief video.

From this three-day event, four key themes emerged that are evolving the angel investing landscape:

This post is by William Carleton.  William serves on the Angel Capital Association's Public Policy Committee Advisory Council. He speaks and presents frequently to angel groups and to the general public, most recently concerning the JOBS Act. He is a contributing editor at VC Experts, where his posts on implementation of the JOBS Act are published every Wednesday.  Read the original article here.

"California Assembly Member, Bonnie Lowenthal, recently introduced the 'Right to Know Act of 2013' (AB 1291), which would require any company that retains a California resident’s personal information to provide a copy of that information to that person, free of charge, within 30 days of the request."

Can you imagine a tiny, five person startup company dealing with such requests from the 1,000 investors it raised an aggregate couple hundred thousands dollars from?

If Team is the one of the most critical elements in a successful startup, does this principal also apply to the investor base - that the investor team should also be extraordinary?

We think Yes, the investor team is part of the critical presence in a startup and finding the right investor to team with you can be challenging. How do you find the right investors to be part of an investment and how does your group become part of the early stage investor ecosystem? The best place to start is the Angel Capital Association Summit, scheduled for April 17-19, 2013 in San Francisco. The theme is “Navigating Change for Angel Success” and the full agenda is here.

Among the “tax extenders” included in the American Tax Relief Act passed by Congress on January 1st to avoid the “fiscal cliff” was a 100 percent exemption for gains made in Qualified Small Business Stock. Effectively this means that you pay no taxes on gains from your investments that meet several criteria and the Alternative Minimum Tax does not apply for investments made in 2013 and in 2012 (so it is retroactive).

I want to make sure angels and small businesses are aware of this tax advantage, which is designed to increase investment in the innovative startups that create jobs in America. If you are interested in this program, PLEASE TALK TO YOUR ACCOUNTANT to ensure you have all the information you need to structure your investments to meet all requirements.

ACA made a big announcement last week - we are expanding our membership to include individual accredited investors and accredited platforms. We also plan to include single family offices this year.  I think this is the right thing to do, while still noting our strong belief in the importance and relevance of angel groups.  Our current members will be better connected to the evolving ecosystem of early-stage investors and may also get some new individual members themselves.

One of the questions I get asked about the most is the valuation of angel deals, so I want to connect everyone to two resources with some data behind them:

• 2012 Valuation Survey of Angel Groups - Bill Payne's blog post, via Gust, late last year
• The Halo Report, by Silicon Valley Bank, Angel Resource Institute, and CB Insights - quarterly data and analysis of angel group investments