Some well-known investors – namely Benchmark partner Bill Gurley and Andreessen Horowitz co-founder Marc Andreessen – have recently sounded the alarm about a tech bubble. The fear is that huge valuations and quick cash burns by tech startups are out of control and will derail the startup market. While the claims make great headlines, the angel investors I talk to don’t see it quite that way.

Instead, they see a much more nuanced situation – based on geography and industry. The Angel Capital Association recently conducted an informal survey of members to ask whether they are seeing increased valuations and burn rates among the startups they work with. While many in Silicon Valley and some in Washington, D.C., and New York said yes, angel investors elsewhere in the country weren’t seeing the same thing – yet.  They are concerned, however, that a bubble mentality could creep across the country.

“The current exuberant market is primarily a Venture Capital-driven phenomena focused in a few geographies. It has been fanned by the media, which has had a ripple effect in the angel-backed market,” said John May, managing partner of New Vantage Group in McLean, Va., in responding to the survey.

A bubble.

A bubble. (Photo credit: Wikipedia)

The median pre-money valuation for 2014 angel group deals actually is up about 20 percent – $3 million compared to $2.6 million a year ago, according to the Halo Report, perhaps adding fuel to the bubble belief. But that median valuation is still $3 million – not out of line – and deal sizes are down slightly. This means angel groups are helping companies keep expenditures down. The report also shows that angel group investing is done throughout the country–considerably less concentrated than VC investments, which are largely in Silicon Valley.

While many angels are not investing in startups with high valuations, they are worried about the crazy burn rates, which could put companies out of business. Some stories out of Silicon Valley are staggering, especially for hot tech companies: CEOs driving expensive cars, startups locking into long-term leases in oversized office spaces, and rising salaries for top talent.

“The bubble is in the plans the companies have for the money. I’m seeing more companies trying to raise a smaller amount (6-8 months of runway) with the idea of spending it all while getting enough traction for a Series A. Companies used to raise more and husband it carefully rather than spending so rapidly,” notes AngelList Chief Investment Officer and San Francisco-based angel Kevin Laws.

Although the craziness is not universal among industries or geographically ubiquitous, angel investors are finding that Silicon Valley is influencing deals elsewhere more than ever before. Many startups from all over are trekking to Silicon Valley and quoting Silicon Valley valuations in their fundraising back at home. Couple that with increasing media coverage, data availability, internet communication and discussion about early stage investment, it’s highly likely that the bubble will trickle into other regions.

Best Practices to Minimize Burn

Sophisticated angels, luckily, have ways to protect themselves, the companies they invest in, and the startup ecosystem. Many are already engaging in these best practices which help minimize expenditures of young startups to reduce cash burn. These include:

  • Strategies to protect against ridiculous valuations. Get the valuation right in the first place by understanding the principles of valuation and market activity in your region. More than a few angels in the ACA survey said that startups quoted valuations that were twice the amount for their region and stated that they would get that valuation in Silicon Valley. The reaction? Angels suggested the entrepreneur raise capital in Silicon Valley instead.
  • Set realistic plans for spending funds. Additionally, make monthly adjustments based on milestones and performance.  Angels emphasize this is critical to building a successful company with real revenue and appropriate spending.
  • Be active on the board and ensure discipline among company leaders.  Active angels take board seats, monitor cash runway, and make the milestones necessary for raising more money explicitly clear.
  • Insist on regular financial reports. Valerie Gaydos, who leads Angel Venture Forum in Washington, DC says, “Before investing we set the record straight that we expect regular reporting….and give them examples of what is expected in those reports. If they can’t abide by the reporting requirements to shareholders in a way that we want, then don’t take our money.”
  • Meet regularly with entrepreneurs to monitor, mentor and track milestones. “Angels provide vital coaching and mentoring that, on average, purges excesses out of any operating budget,” said Ken Kousky, leader of BlueWater Angels in Michigan.
  • Approve budgets and insist on dialog if major changes are included.  Some angels are insisting on monthly briefings on budget to actual expenditures.

Most of these good practices provide the foundation for building strong relationships between investors and entrepreneurs.  My key takeaway from the survey is that angels are working to maintain sanity by partnering with entrepreneurs to keep cash expenditures to a reasonable level and mentoring them to keep them on track.  Hopefully more investors can do the same and by combining forces together we can hold back the risk of a tech bubble happening across the country.

Article source: http://www.forbes.com/sites/mariannehudson/2014/10/30/startup-bubble-savvy-angels-help-entrepreneurs-avoid-burning-cash/

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Invest in Private Equity with a Self Directed IRA

Invest in Private Equity with a Self Directed IRA

“The SEC should take into account that many investors might not quite meet the financial benchmarks of an accredited investor, but may have tremendous financial knowledge and investment experience,” noted Jaime Raskulinecz, CEO of Next Generation.

Roseland, NJ (PRWEB) October 29, 2014

Next Generation Trust Services is alerting its clients about possible SEC changes regarding who qualifies as an accredited investor. The administrator of self-directed retirement plans has among its clients, investors who use the funds in their self-directed IRAs to invest in equity funding opportunities in early-stage companies. The SEC is now talking about making changes that could alter the crowdfunding and angel investing landscape.

Currently, the SEC requires that accredited investors have an individual income of at least $200,000 for the past two years ($300,000 household income) and a net worth of $1 million, excluding primary residence. There is no criterion set for an investor’s financial sophistication.

The SEC’s Investor Advisory Committee has approved several recommendations to the accredited investor definition; no changes or official rulings have taken place yet, but startup companies have concerns about their investor pools possibly shrinking. Among the criteria discussed by the Investor Advisory Committee was financial sophistication of the investor based on professional experience, education or credentials; other recommendations concern investors’ financial thresholds and alternative approaches to setting those thresholds.

“The SEC should take into account that many investors might not quite meet the financial benchmarks of an accredited investor, but may have tremendous financial knowledge and investment experience,” noted Jaime Raskulinecz, founder and CEO of Next Generation. She explained that some of her clients include equity funding in their self-directed retirement portfolios because they meet the SEC’s financial criteria. Angel investing, private placements and venture capital investments are among the many alternative assets allowed in self-directed retirement plans.

In self-direction, account holders make all their own investment decisions, usually based on investments they already know and understand, through which they may build more diverse and potentially more lucrative retirement portfolios. In addition to equity funding opportunities, self-directed retirement accounts may include many other nontraditional investments, such as real estate, commodities, hedge funds, unsecured loans and precious metals. As the third-party administrator, Next Generation provides comprehensive account administration, executes the transaction, and offers education and guidance to investors on the various options and benefits of self-direction as a retirement strategy.

“We hope the SEC will choose to open more doors to more investors, and help startup companies to attract the capital they need,” said Raskulinecz. “Many smart investors may fall slightly short of the financial minimums but have the business acumen or investing know-how to make smart investment decisions they are comfortable with, and that will help grow our economy in the long run.”

The discussion around accredited investors concerns the JOBS Act and the phasing in of its provisions; the final piece was meant to make it easier for people to invest in early stage companies. “When Title III of the JOBS Act is fully implemented, companies will be able to offer stock in exchange for capital to smaller investors,” said Raskulinecz. “Until that day arrives, no one knows what the final regulations will really be; we will continue to keep investors updated on our blog.”

To learn more about self-directed retirement plans, visit http://NextGenerationTrust.com or contact Next Generation Trust Services at (888) 857-8058 or Info(at)NextGenerationTrust(dot)com. For more information about the possible SEC changes

About Next Generation Trust Services

Next Generation Trust Services (NGTS), headquartered in Roseland, New Jersey, is a professional third-party administrator of self-directed retirement plans. NGTS provides education, administrative support, and account maintenance to individuals interested in self-directing their retirement portfolios with a wide variety of investments that are not typically found in an IRA, such as real estate, precious metals, notes and mortgages, private placements, accounts receivables, limited partnerships, hedge funds, and much more. Next Generation Trust Services serves clients globally via its website, http://www.NextGenerationTrust.com. For more information on self-directing a retirement plan, call 973-533-1880, 888-857-8058, or e-mail Info(at)NextGenerationTrust(dot)com

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Article source: http://www.prweb.com/releases/2014/10/prweb12288045.htm

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There are three very good reasons why entrepreneurial women and people of color aren’t making enough pitches for funding, says Natalia Oberti Noguera, founder of Pipeline Fellowship, an angel investing bootcamp for women. Here’s why.



Jennifer Nycz-Conner
Assistant Managing Editor/Video- Washington Business Journal

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Why aren’t women and entrepreneurs of color getting the funding?

There are plenty of reasons, says Natalia Oberti Noguera, founder and CEO of Pipeline Fellowship, an angel investing bootcamp for women. One of the biggest? They’re not pitching.

There are three big reasons why those pitches aren’t happening enough. Noguera shared them Oct. 23 with us after addressing the audience at the Washington Area Women’s Foundation Leadership Luncheon.

Jennifer Nycz-Conner writes the weekly Working the Room column and oversees all video production.




Article source: http://www.bizjournals.com/washington/morning_call/2014/10/3-reasons-women-and-entrepreneurs-of-color-arent.html

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After selling my startup, the first big “purchase” I made was an investment in another startup.

I loved the idea of angel investing; I wanted to give back to the community that supported me when my startup was little more than a crazy idea. I wanted to be involved with promising startups outside of my own space. And, of course, I wanted to make more money.

I’m still just a baby angel, with a lot left to learn. But what’s surprised me most about my foray into angel investing is how much it has taught me about being a better fundraiser. Here are 10 things I’ve learned about fundraising after becoming an angel investor myself:

Tell a Good Story

Storytelling is the most effective way to convince someone of something. A powerful narrative captures our attention, tugs at our heartstrings and makes us vulnerable. Investors have to sit through a lot of boring meetings. Make it easy for them to pay attention.

Be Crystal Clear About What You’re Selling

It’s always surprising to me how many entrepreneurs are unable to clearly explain what they’re selling. If after reading through your pitch, watching your video, perusing your AngelList profile, and speaking with you for half an hour, if I’m still unable to explain to my husband in two sentences what you do, I’m not going to invest.

If you can’t explain what you do in two sentences, how will I?

It doesn’t matter how complicated your technology is, or how obscure the problem is that you’re trying to solve. You must find a way to distill it into something an intelligent layperson can understand. If you’re unable to do that, my assumption is you can’t explain your product to your customers either.

Make Your Presentation Pretty

Design matters. For the same reason good design matters for your product, it matters for your presentation. Investors are just as impressionable as your average consumer. Pretty slides send a signal that you know how to build a good product. (This may matter less in hardcore technology or enterprise startups, but it certainly doesn’t hurt.)

Good design alone won’t get me to write a check, but it will impress the hell out of me. I’m a sucker for pretty pictures, just like everyone else. Use that to your advantage.

Anticipate Their Questions

As you’re developing your pitch, try to anticipate the questions that will arise on each slide. For major questions, address them head-on. For smaller questions, be prepared with a good comeback, supported by data.

Be Clear About Your Goals

I want to feel confident that you’re going to put my money to good use. I don’t need to see detailed financials (in fact, I probably don’t want to), but I do want to have a sense of what my money will help you achieve.

The best presentations specifically lay out exactly what they plan to accomplish with the current round of funding. Be explicit with your goals, and it will instill confidence in the investor that you have a clear vision and will spend the money wisely (even though all good investors know that plans change).

Hook Them in 10

Angel investing is by and large a gut-driven activity. For every investment I’ve done, I made the decision to invest more or less instantaneously. I still listened to the pitch, asked a lot of questions, and (somewhat) rationally evaluated all the information before committing to invest. But, if I’m honest with myself, I can see that the decision was always made with my gut. And it was usually made before I had any details.

Recognize that investors make snap judgments, and do your best to hook them at the outset.

Project Confidence

This one is obvious, but it’s so important that I felt I had to include it. Confidence is everything. It’s a fine line, of course. Don’t be arrogant. Be respectful and personable and kind. But you have to believe in yourself and your startup. And you have to make me believe that you do. Investors sniff out doubt like hound dogs.

Find Investors Who “Get It”

I’ve passed on a lot of investments that fit all the obvious criteria: they were playing in a market ripe for disruption, had a great team, savvy founder, innovative product, lots of other reputable investors, etc. But I still passed.

Why? Even though everything looked great on paper, I just personally wasn’t excited about what they were doing. It wasn’t something I wished I had thought of. I know that many of the opportunities I’ve passed on will go on to be very successful. And I’m fine with that. Because for me, angel investing is not primarily about making money — it’s about participating in startups that I find exciting. I believe this is the primary motivation for most entrepreneurs-turned-angels.

Don’t waste your time pitching to angels who are not likely to just get it — not because they’re idiots, but because, for a million and one reasons, it’s just not their thing.

Be Honest

This is probably one of the hardest things to do consistently, but it matters a lot. I will never, ever write a check to someone I think has lied to me, even if it was just a little white lie.

I’m as guilty as the next entrepreneur for pretending to know a number when I don’t. It’s hard to be honest when you’re under pressure. But I have so much more respect for a founder that just fesses up when her dirty laundry is uncovered (or better yet, reveals it herself) than one who tries to cover it up with an obvious lie. Lying sets a bad tone for your relationship with your investors and it also betrays your self-doubt. If you’re truly confident in your ability to succeed, you have no reason to lie.

Accept Rejection Gracefully

I know how frustrating it can be to hear “no.” You’ll probably hear “no” more often than you’ll hear “yes” throughout your fundraising process. As tempting as it is to be a jerk to an investor that rejects you, you have a lot more to gain by being gracious. This is almost certainly not the last round of funding you’re going to raise, or the last startup you’re going to do.

Investors don’t like to say “no” any more than you like hearing it. It’s hard to let down an eager entrepreneur, especially if you’ve been in their position before. It’s the one thing about angel investing I truly hate. When a founder responds graciously, my esteem for that founder rises tenfold. It even makes me question my decision to pass. And it certainly makes me want to keep tabs on the startup for the next round.

Prerna Gupta is Founder CEO of a stealth startup in a novel area of artificial intelligence. She is a serial entrepreneur, angel investor and author, whose work has been published in the New York Times, Forbes, TechCrunch, FastCompany and Recode, among others. She was previously Chief Product Officer and Chief Marketing Officer at Smule. Prior to that, Prerna was co-founder and CEO of Khush, where she led the company to profitability and acquisition by Smule in 2011.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Article source: http://smallbusiness.foxbusiness.com/finance-accounting/2014/10/28/10-fundraising-lessons-ive-learned-as-angel-investor/

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After selling my startup, the first big “purchase” I made was an investment in another startup.

I loved the idea of angel investing; I wanted to give back to the community that supported me when my startup was little more than a crazy idea. I wanted to be involved with promising startups outside of my own space. And, of course, I wanted to make more money.

I’m still just a baby angel, with a lot left to learn. But what’s surprised me most about my foray into angel investing is how much it has taught me about being a better fundraiser. Here are 10 things I’ve learned about fundraising after becoming an angel investor myself:

Tell a Good Story

Storytelling is the most effective way to convince someone of something. A powerful narrative captures our attention, tugs at our heartstrings and makes us vulnerable. Investors have to sit through a lot of boring meetings. Make it easy for them to pay attention.

Be Crystal Clear About What You’re Selling

It’s always surprising to me how many entrepreneurs are unable to clearly explain what they’re selling. If after reading through your pitch, watching your video, perusing your AngelList profile, and speaking with you for half an hour, if I’m still unable to explain to my husband in two sentences what you do, I’m not going to invest.

If you can’t explain what you do in two sentences, how will I?

It doesn’t matter how complicated your technology is, or how obscure the problem is that you’re trying to solve. You must find a way to distill it into something an intelligent layperson can understand. If you’re unable to do that, my assumption is you can’t explain your product to your customers either.

Make Your Presentation Pretty

Design matters. For the same reason good design matters for your product, it matters for your presentation. Investors are just as impressionable as your average consumer. Pretty slides send a signal that you know how to build a good product. (This may matter less in hardcore technology or enterprise startups, but it certainly doesn’t hurt.)

Good design alone won’t get me to write a check, but it will impress the hell out of me. I’m a sucker for pretty pictures, just like everyone else. Use that to your advantage.

Anticipate Their Questions

As you’re developing your pitch, try to anticipate the questions that will arise on each slide. For major questions, address them head-on. For smaller questions, be prepared with a good comeback, supported by data.

Be Clear About Your Goals

I want to feel confident that you’re going to put my money to good use. I don’t need to see detailed financials (in fact, I probably don’t want to), but I do want to have a sense of what my money will help you achieve.

The best presentations specifically lay out exactly what they plan to accomplish with the current round of funding. Be explicit with your goals, and it will instill confidence in the investor that you have a clear vision and will spend the money wisely (even though all good investors know that plans change).

Hook Them in 10

Angel investing is by and large a gut-driven activity. For every investment I’ve done, I made the decision to invest more or less instantaneously. I still listened to the pitch, asked a lot of questions, and (somewhat) rationally evaluated all the information before committing to invest. But, if I’m honest with myself, I can see that the decision was always made with my gut. And it was usually made before I had any details.

Recognize that investors make snap judgments, and do your best to hook them at the outset.

Project Confidence

This one is obvious, but it’s so important that I felt I had to include it. Confidence is everything. It’s a fine line, of course. Don’t be arrogant. Be respectful and personable and kind. But you have to believe in yourself and your startup. And you have to make me believe that you do. Investors sniff out doubt like hound dogs.

Find Investors Who “Get It”

I’ve passed on a lot of investments that fit all the obvious criteria: they were playing in a market ripe for disruption, had a great team, savvy founder, innovative product, lots of other reputable investors, etc. But I still passed.

Why? Even though everything looked great on paper, I just personally wasn’t excited about what they were doing. It wasn’t something I wished I had thought of. I know that many of the opportunities I’ve passed on will go on to be very successful. And I’m fine with that. Because for me, angel investing is not primarily about making money — it’s about participating in startups that I find exciting. I believe this is the primary motivation for most entrepreneurs-turned-angels.

Don’t waste your time pitching to angels who are not likely to just get it — not because they’re idiots, but because, for a million and one reasons, it’s just not their thing.

Be Honest

This is probably one of the hardest things to do consistently, but it matters a lot. I will never, ever write a check to someone I think has lied to me, even if it was just a little white lie.

I’m as guilty as the next entrepreneur for pretending to know a number when I don’t. It’s hard to be honest when you’re under pressure. But I have so much more respect for a founder that just fesses up when her dirty laundry is uncovered (or better yet, reveals it herself) than one who tries to cover it up with an obvious lie. Lying sets a bad tone for your relationship with your investors and it also betrays your self-doubt. If you’re truly confident in your ability to succeed, you have no reason to lie.

Accept Rejection Gracefully

I know how frustrating it can be to hear “no.” You’ll probably hear “no” more often than you’ll hear “yes” throughout your fundraising process. As tempting as it is to be a jerk to an investor that rejects you, you have a lot more to gain by being gracious. This is almost certainly not the last round of funding you’re going to raise, or the last startup you’re going to do.

Investors don’t like to say “no” any more than you like hearing it. It’s hard to let down an eager entrepreneur, especially if you’ve been in their position before. It’s the one thing about angel investing I truly hate. When a founder responds graciously, my esteem for that founder rises tenfold. It even makes me question my decision to pass. And it certainly makes me want to keep tabs on the startup for the next round.

Prerna Gupta is Founder CEO of a stealth startup in a novel area of artificial intelligence. She is a serial entrepreneur, angel investor and author, whose work has been published in the New York Times, Forbes, TechCrunch, FastCompany and Recode, among others. She was previously Chief Product Officer and Chief Marketing Officer at Smule. Prior to that, Prerna was co-founder and CEO of Khush, where she led the company to profitability and acquisition by Smule in 2011.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

Article source: http://smallbusiness.foxbusiness.com/finance-accounting/2014/10/28/10-fundraising-lessons-ive-learned-as-angel-investor/

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As the CEO of equity crowdfunding platform SyndicateRoom, I’m frequently asked if equity crowdfunding could replace Venture Capitalists (VCs) and more often than not, this question is asked as a hopeful one. But is it fair to vilify VCs? To find out I met David Cleevely CBE, one of the most experienced, networked and switched on Business Angels in the United Kingdom, who has co-invested with many VCs in the past.

 

David has been an entrepreneur for over thirty years. His string of successes include co-founding the now AIM-listed business ABCAM with Jonathan Milner and spectrum monitoring company CRFS, which reported average annual revenue growth of 69% over the past 3 years. David has also advised various governments on innovation policy frameworks and is part of the board of the hugely successful Raspberry Pi. David is also a prolific Business Angel investor with 24 companies in his current portfolio, and notable amongst his 16 or so exits are successes such as Analysys, Neul, 3WayNetworks, Bango, Horizon and Abcam. Finally, David is a champion of business angel investing having been especially active in the Cambridge area, where David co-founded the Cambridge Network and Cambridge Angels.

 

Business Angel David Cleevely CBE

Business Angel David Cleevely CBE on Venture Capitalists (VCs)

The poor reputation that VCs hold among both entrepreneurs and business angels is well known. David readily recalls several horror stories where VCs had a negative impact on founders and early investors. David explains he has seen VCs urge a company to spend more quickly than they need to, so that the VC can push out other investors and dilute founders in the next (now more imminent) funding round.

 

This game can become ruthlessly psychological, with some VCs exploiting a founder’s belief in their business. For example, following numerous founding rounds a VC can have diluted a founder down to a point where, rationally, it is not really worth them being around anymore. Yet a founder can be, understandably, emotionally wedded to their business (which they have built from scratch and often sacrificed a social life, a regular salary, etc. for). So when the VC wants to have downside protections and says ‘…but you believe that your business will be a success so these preferential rights shouldn’t matter’, the VC has the founder over a barrel. David says in this situation, a founder’s commitment to his or her business is too strong; David’s never known a founder to walk away at this point.

 

“It’s like a bacon omelet. VCs are the eggs and the company founder is the bacon. The hen is involved but the pig is committed.” It’s an amusing analogy but it underlies a serious message. For the VC, a company will always be just one of a portfolio, a cold-hearted financial investment, which risk of failure has been duly considered. However, for the founders the company represents a key emotional attachment and probably the greatest financial asset they own – a life-changing opportunity.

 

So, it is all doom and gloom in the Venture Capital world? After all, even David stresses, despite the rise in business angels, if a firm wants to raise a £5m round they will still need a VC. So VCs are necessary but are they a necessary evil? David is categorically clear – “Not all VCs are evil” .

 

In fact, according to David, there are many VCs with a longer-term perspective, ones that see the bigger picture over narrow short-term interest, which can be great. David doesn’t hesitate to praise DFJ Esprit for going the extra mile in a specific deal to ensure EIS rules were not broken for the individual angel investors, despite not having any EIS benefits themselves. In this instance DFJ clearly saw the longer game: there will be other deals and they have just bought a ticket to the party. Imperial Innovations are also openly praised by David as the result of their behaviour in specific deals.

 

So how does a company find a ‘friendly’ (as David terms them) VC? Just like David would do due diligence on a company before investing, companies need to do their own due diligence before accepting a new investor. So network, ask around. Business Angels and their networks can provide a good forum to do this. David welcomed talking about his good experiences with DJF and Imperial Innovations more than he did retelling the negative stories he has about some VCs .

 

David’s simple message is that some people’s interests will be more aligned with your own than others’. Sometimes this may be unavoidable but to be in control as a company founder you need to understand the players and their motivations and be aware of how that fits in with your own interests.

Article source: http://www.forbes.com/sites/goncalodevasconcelos/2014/10/27/not-all-vcs-are-evil/

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KUALA LUMPUR: Virtuous Investment Circle (ViC) chairman Bob Chua (pic) is a frustrated man. That is because four years after the establishment of ViC, the non-profit group of independent angel investors which aims to grow angel investment in the country has yet to facilitate a significant deal that it can take credit for.

Stressing the importance of angel investing, he urged the government to take ownership of the financial angel community, warning that it being neglected could lead to capital flight and brain drain.

“I’m not happy with our progress. We need funds, we need resources, and we need a government agency to take ownership. We also need to be more structured. We need to run it like a proper organisation, and we need more people who are full-time looking at deals,” Chua told The Edge Financial Daily in an interview recently.

Essentially, ViC helps entrepreneurs find angel investors. It does not take any stake in the company but only vets business proposals. If the idea is attractive enough, it forwards it to a list of potential investors.

But with less than 10 angel investors today, ViC is struggling to be recognised by the Registrar of Societies Malaysia (ROS) and awareness about its service is very low. It probably doesn’t help that most ViC members are media shy as they do not like to publicise their deals due to possible failures, said Chua.

“We have seen a lot of deal flows among us, some may lead the deal, or we might join in as a club deal. It is still happening. But mostly, everyone is doing their own thing. ViC is loosely structured and we don’t have public awareness. If a company is looking for angel investor, it won’t know where to go,” he said.

Angel investor’s are high net worth individuals who provide capital for a business start-up, usually in exchange for equity. They use their personal disposable income and professional experience to invest in the growth of small businesses. Usually, they invest about RM500,000 to RM5 million in a single deal.

Currently, Malaysian Business Angels Network (MBAN), an official trade association for angel investors and angel clubs, oversees the major financial angel communities, namely ViC, Pikom Angel Chapter and Endeavour Malaysia. But more needs to be done to create a sustainable angel investment ecosystem, stressed Chua, an angel investor himself.

“The association (MBAN) is there for no purpose, really. They don’t even know the numbers [of deals and members] themselves. They should capture the information about what’s the size of [the] industry and how many deals have been concluded,” he said.

“We can claim that we have large numbers in our group, but how many members are successfully closing deals?” he asked.

The angel investment community is presently not regulated, but Chua said government agencies in Malaysia have sufficient financial resources to step in and undertake a big top-down restructure of the whole ecosystem.

“It’s a chicken and egg situation. If you don’t have the structure, entrepreneurs won’t know where to look for funds and the angels won’t have enough deal flows,” he said, adding that angel investing is “extremely important” to a country’s development.

“If you don’t see that [angel investment], you won’t see innovation, job creation and tax contribution,” he stressed.

Going forward, ViC will be looking for high net worth individuals as well as “the rich second or third generations” instead of professional angel investors.

“We are targeting people our age who wish to be involved in sexy deals. They can be a grandson of business tycoon or those who work in a big corporation with extra money to invest,” Chua said.

 

This article first appeared in The Edge Financial Daily, on October 27, 2014.

Article source: http://www.theedgemarkets.com/my/article/vic-angel-investment-community-largely-neglected

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Half of the 34 companies Jeff Rusinow has invested in during the last 14 years have either gone bust or are gasping for air, the veteran angel investor told more than 400 people involved in the start-up community.

But most of the other half of those companies have produced a combination of strong potential and profitable exits that keep Rusinow investing in state-based start-ups.

“It’s not California, but Wisconsin’s ecosystem is vibrant enough that everyone can do well,” said Rusinow, who was keynote speaker Tuesday night at an event where gener8tor premiered its most recent class of start-ups.

In 2000, Rusinow started Silicon Pastures, which is among the state’s oldest angel investing networks. He said he has seen a huge improvement in the ecosystem that has grown up around the state’s start-ups that have high growth potential. That has translated into more opportunities to make money in the risky business of betting on which young concerns will have success.

“While I don’t think there’s been any appreciable difference in the amount of active angel investors, there’s been dramatic growth in the amount of firms and funds that have either started in the state or are coming in,” Rusinow said.

Rusinow and a number of other Wisconsin angel investors earlier this month had a big payday when RevolutionEHR, a Madison provider of electronic health record software for optometrists, sold a majority stake to RevOptix, a San Francisco-based investment group.

RevolutionEHR, formally Health Innovation Technologies Inc., was started in 2006 by Scott Jens, an optometrist and entrepreneur. The company has just under 70 employees, with about 20 of them in the state. It says it has been recognized as an Inc. 5000 high-growth company for the past three years, has a 98% customer retention rate, and recently expanded into Canada.

The amount of the investment RevOptix made was not disclosed, but Rusinow and others called it “significant.”

Sean Cleary, a Madison-area investor who is president of Cleary Building Corp., said he made seven times his initial investment on the RevolutionEHR deal. Cleary, like Rusinow and other early angel investors in the company, still has some money in the company. But he says he plans to reinvest the proceeds from RevolutionEHR into other Wisconsin start-ups.

“I’m definitely looking and interested in taking some of the proceeds and putting them into other companies,” Cleary said.

That’s why it’s so critical to the health of the start-up community to have exits like RevolutionEHR’s, said Tom Still, president of the Wisconsin Technology Council.

“It replenishes the supply of capital that can be reinvested in the early stage sector,” Still said.

George Mosher, who sold his National Business Furniture in 2006 for $82 million, also made money in the RevolutionEHR deal. He says that along with the potential for making money, he invests to help the state and to meet interesting people.

“I felt like I could do more for Wisconsin using some of the skills I’ve developed,” said Mosher, who has invested in more than 160 start-ups since 2000.

Through their efforts, business leaders like Mosher, Rusinow and Cleary have created a lot of jobs and wealth in Wisconsin, said Joe Kirgues, co-founder of gener8tor, the start-up accelerator.

Still, keeping angels in the game can be like trying to keep Derek Jeter in uniform for another year, Kirgues said. Rusinow, for example, frequently talks about taking more vacations.

“Part of the reason we asked Jeff to keynote at the gener8tor premiere is we wanted to remind him that there’s more to do here,” Kirgues said.

Article source: http://www.jsonline.com/business/angel-investor-jeff-rusinow-optimistic-about-new-start-ups-succeeding-b99376878z1-280265572.html

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Dave Berkus is one of the most successful angels I know.  He has made 108 investments in early-stage companies and has an IRR of 97%.  Dave is a special case – he is a top speaker, expert in corporate governance, and has a valuation methodology named after him – even so, are there insights smart angels can pick up from this Los Angeles-based investor?

What is it about Dave that makes him that good? More to the point–are there traits we can emulate from successful angels like him?

I recently asked some of the angel investors I most respect – board members of the Angel Capital Association – what they think are the characteristics of the best angels and also got ideas from Roland Schumann III of Sierra Angels.  These angels are successful as investors, with great financial returns and many of them educate other angels to build their success.

Their suggestions may surprise some people.  Sure, the traits include industry expertise and top of the line best investment practices.  But, personality and character traits like sense of humor and fun were mentioned the most often.

When I think about it, this makes sense.  Angels invest their own money and time – if they can’t have fun in the process, why do it at all?

 Stuartmiles | Dreamstime.com - Respect Ethics Honest Integrity Sign Means Good Qualities Photo

© Stuartmiles | Dreamstime.com – Respect Ethics Honest Integrity Sign Means Good Qualities Photo

How many of the 30 traits on this list of what makes an angel investor a good angel do you have?

Character

  • High integrity and collegiality
  • Avoids conflicts of interest and easily follows a code of conduct
  • Sense of humor – even in tough times a sense of goodwill trumps everything
  • Deep respect for both the entrepreneur and the entrepreneurial journey
  • Pushes and challenges entrepreneurs with questions and suggestions, while not introducing an “across the table”, combative dynamic
  • Willing to roll up their sleeves or pick up the phone to help the entrepreneur and other investors
  • Patience – ability to see the long vision and share the world’s need for right timing
  • Strong networker – keeps meeting people to build deal flow and investment partnerships
  • Sees the fun of being an angel and enjoys working with entrepreneurs

Investment Process

  • Good at reading people and understanding the risks and potential that the individuals and team dynamics bring to the mix
  • Does thorough due diligence while making a decision in a timely fashion
  • Reliably engages in referrals, screening, due diligence, coaching and board governance, in addition to writing checks
  • Uses the due diligence process to help the entrepreneur better understand the competitive arena and market, identifying ways to become a market leader (even before funds are invested)
  • Continually educates themselves on investment and sector trends and best practices
  • Builds trust with other investors or organizations, leading to syndication and follow-on funding
  • Has an investment strategy and understands how many checks they will write (and what size)
  • Recognizes when to commit and when to walk away from a deal
  • Knows when to get professional support in the deal, particularly working with legal counsel that understands equity financing
  • Connects with other angels through angel groups, accredited platforms and/or events for deal flow and learning

Support

  • Happy to help with the mundane (new accountant, space, HR platform) as well as the value add (second customer, VC for next round)
  • Willing to take a risk on less experienced, but promising entrepreneurs
  • Mentors CEOs and/or entrepreneurial team members to help them succeed
  • Mentors other angels, taking new angels under their wing to learn best practices
  • Serves on company Board of Directors, providing reports to other investors and useful ideas for the company
  • Builds Board governance skills
  • Coaches and judges entrepreneurs at demo day events and meetings in the startup ecosystem

Expertise

  • Knows the sector space cold and can help the entrepreneur navigate straight to the top targets for customers, distributors and other partners
  • Can help build a sales program and hire sales people with their eyes closed
  • Experience as an entrepreneur, corporate profit and loss responsibility or professional in the startup ecosystem
  • Understands where the local startup ecosystem is in its evolution and invests appropriately, never taking an eye off of ROI

Are there angels that have all of these traits? Perhaps, but more importantly the very best angel investors have an awful lot of them.  I know Dave Berkus exudes most of them.

Article source: http://www.forbes.com/sites/mariannehudson/2014/10/23/top-30-traits-of-successful-angels-how-many-do-you-have/

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MACH37

MACH37 Cyber Accelerator

The cyber security market continues to offer one of the most attractive opportunities for all investors.

Herndon, VA (PRWEB) October 23, 2014

The MACH37™ Cyber Accelerator released a white paper today that provides a simplified framework to help angel investors better understand and invest in the rapidly growing cybersecurity market.

Rick Gordon, Managing Partner of MACH37, said, “The cyber security market continues to offer one of the most attractive opportunities for all investors. However, we think angel investing in cyber security has lagged, limited by the often-esoteric descriptions of cyber security product capabilities. MACH37™ wants to take the mystery out of investing in the cybersecurity market.”

The white paper, “Angel Investing in Cyber Security: Understanding the Technology,” describes:

  •     An overview of the complexity of the existing market structure
  •     A simplified framework that enumerates categories that align with a limited variety of threat motives and methodologies; and
  •     A mapping of existing market segments to this simplified framework that cuts through the overly technical jargon currently employed to describe the market.

David Ihrie, MACH37™ Chief Technology Officer, said, “We have promoted the development of partnerships between the angel investor community and cyber security-focused accelerators to address an increasingly complex cyber security market. However, MACH37™ also wanted to provide investors with a practical framework to help sort through the numerous technology categories that comprise the cyber security market today.”

The white paper is available at http://www.mach37.com. For more information on the MACH37™ Cyber Accelerator, the seventeen companies funded by MACH37™ and the upcoming Spring 2015 program visit MACH37.com.

About MACH37™

MACH37™ is the premier accelerator for information security entrepreneurs and startups. We go beyond the traditional model of typical business accelerators by bringing our innovators focused mentorship and support from our extensive network of visionaries, practitioners, and successful entrepreneurs in security. Our Spring and Fall sessions are designed to propel graduating companies into the marketplace, equipped with the skills to grow and compete for funding and market share. MACH37™ was launched in 2013 by the Center for Innovative Technology, in Herndon, Virginia. To learn more, please visit http://www.mach37.com and follow @MACH37cyber on Twitter.

About the Center for Innovative Technology

Since 1985, CIT, a nonprofit corporation, has been Virginia’s primary driver of innovation and entrepreneurship. CIT accelerates the next generation of technology and technology companies through commercialization, capital formation, market development and revenue generation services. To facilitate national innovation leadership and accelerate the rate of technology adoption, CIT creates partnerships between innovative technology start-up companies and advanced technology consumers. Follow CIT on Twitter @CITorg and add the Center for Innovative Technology on LinkedIn and Facebook.

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Article source: http://www.prweb.com/releases/MACH37/Whitepaper/prweb12272547.htm

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