2015 Angel Capital Association Summit Recap

Written by Paul Proffitt@SDRDorg9 years ago

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This year, I made the trek out to San Diego to attend my first Angel Capital Association (ACA) Summit. Here is a brief recap of some of the main themes of events, workshops, and keynotes I was able to attend.

First some background on ACA and the Angel Investor Class:

The ACA is an industry trade group of individual angel investors, angel funds, and family offices that help promote angel investing through education, best practices, certification, and public policy. They have been around for about 10 years and are one of the most influential groups around early stage and seed stage investing in startups.

One of the things that angels strive to do is to better their local economy by helping to create sustainable business by providing very early stage investment into companies. Through their backing of entrepreneurs in starting companies, angels are one of the primary sources for creating new job creation in the country.

Public Policy and Advocacy:

One of the main concerns that the ACA has is the shaping of public policy to make angel investing easier, more transparent, and with smart controls in place to protect investors and entrepreneurs. One of the main policy platforms has to do with SEC and rules around who is considered a qualified investor, to exempt “Demo Days” from the 506(c) Regulation D of public solicitation of investment, and in general to demonstrate to public officials the vital role angels place in real new job creation. The main platform is to keep the definition of accredited investor to remain the same, but with suggestions on being accredited could be expanding to people who show domain expertise either through education or through industry experience. The ACA is well versed in these areas and are making considerable headway in educating policy decision makers in Washington and in certain states.

Crowdfunding:

One of the major topics of conversation with a few workshop topics was around crowdfunding – both from a what it is, impacts to angel investing, and how the new SEC Reg A+ brings in some issues around public solicitation, non-accredited investor management and the overall state of the space. I spent a disproportionate amount of time within these sessions – being that many of the startups that SunDown sees pitch think about crowdfunding as an avenue to investment. From these workshops, I learned that the angel investor class needs significant education in what crowdfunding actually is – in all of its variations – how crowdfunding can be used to de-risk investments and how equity crowdfunding could be used to the benefit of angel investors to help attract more investment into a company. I have to say that I was very disappointed in the level of knowledge from the session speakers as none of them had any connection with crowdfunded backed companies, the crowdfunding platforms, or people who help launch successful crowdfunding campaigns. I feel that the ACA has a huge opportunity here to educate its members on how crowdfunding can play a bigger role in angel investing if the ACA can identify knowledgeable subject matter experts for the topic.

Opportunity:

One of the main themes was around the opportunity that angels have in early stage companies. Much of the venture capital market has moved to later stage deals and the true early stage companies are seeing a gap in funding that angel investors could fill. The angel investors have seen a growth in the number of deals and the size of the deals in 2014 and it appears that the trend is continuing into 2015. One of the downsides here is that with the VCs going later stage into less risky investments, angels too have crept up to take on less risky investments too. There is a gap in what was seen as the true seed, pre-seed, and 1st money rounds for startups years earlier. There is tremendous opportunity for the riskier risk capital to get in on many more early stage deals… we just need more angels with the risk tolerance to move into that space again.

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