Thunderbird Angel Network Blog

2010 Shows 14% Increase In Angel Investor Funding & Deals

Thu, 21 Apr 2011 17:46:00 GMT

The angel investor market in 2010, following a considerable contraction in investment dollars in 2008 and 2009, exhibited a rise in investment dollars and in the number of investments. Total investments in 2010 were $20.1 billion, a robust increase of 14% over 2009, according to the Center for Venture Research at the University of New Hampshire.

A total of 61,900 entrepreneurial ventures received angel funding in 2010, an increase of 8.2% over 2009 investments. The number of active investors in 2010 was 265,400 individuals, a small growth of 2.3% from 2009. The significant increase in total dollars, coupled with the rise in the number of investments resulted in a larger deal size for 2010 (an increase in deal size of 5.4% from 2009). These data indicate that angels have significantly increased their investment activity, and are committing more dollars resulting from higher valuations. It appears that a cautious optimism to
investing is taking hold. Noteworthy changes did occur in the critical seed and start-up stage investment landscape.

Sector Analysis

The following is a breakdown of angel investments by sector:

30 % Healthcare Services/Medical Devices and Equipment
16% Software
15% Biotech
8% Industrial/Energy
5% Retail
5% IT Services

Job Growth

Angel investments continue to be a significant contributor to job growth with the creation of 370,000 new jobs in the United States in 2010, or 6 jobs per angel investment.

Return Rates

Mergers and acquisitions represented 66% of the angel exits, and bankruptcies accounted for 27% of the exits in 2010. About half of the angel exits were at a profit and annual returns for angel’s exits (mergers and acquisitions and IPOs) were between 24% and 36%, however, these returns were quite variable.

Stage

Angels again reduced their investments of seed and start-up capital, with 31% of 2010 angel investments in the seed and start-up stage, a decrease of 4% from 2009. Angels also exhibited an increased interest in post-seed/start-up investing with 67% of investments in the early and expansion stage, an increase from 2009. New, first sequence, investments represented 41% of 2010 angel activity, also a decline from the last year of 6%. This decrease in seed/start-up stage and first sequence investing is of concern. However, as existing investments move to an exit and thus reduce the need for follow-on investments, it is anticipated that angel capital will become available for new seed stage investments.

Yield Rates

The yield rate is defined as the percentage of investment opportunities that are brought to the attention of investors that result in an investment. In 2010 the yield rate was 18.4%, an increase from the 2009 yield rate (14.5%). While a higher yield rate is an encouraging development for entrepreneurs seeking angel capital there is a question of the sustainability of this rate. As the yield increases, more entrepreneurs may begin to seek angel capital and as this supply increases it is possible that the yield rate will retreat to the historical average of 10% to 15%.

The Center for Venture Research (CVR) has been conducting research on the angel market since 1980. The CVR’s mission is to provide an understanding of the angel market through quality research. The CVR is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers. For more information visit Center for Venture Research or contact the CVR at 603-862-3341.

Original article credits:

Jeffrey Sohl, “The Angel Investor Market in 2010: A Market on the Rebound”, Center for Venture Research, April 12, 2011.

Forget the Jockey, Bet on the Horse! by Thomas Thurston | StartupReport.com

Mon, 28 Feb 2011 18:10:00 GMT

A MICRO-EXPERIMENT

Framework in Question: Great management leadership is predictive of superior firm performance. (i.e. ‘bet on the jockey, not the horse’)

Framework Background: Venture capitalists and angel investors cited the “quality of the management team” as a top indicator of likely startup success in a 2009 poll. Indeed, few people would prefer bad, dysfunctional teams to good, effective teams. There are numerous empirical studies supporting the view that good leadership can, indeed, make a positive difference in company performance. But is it predictive?

First, it should be noted that there have been many studies around this general topic. For example, a study of 132 Methodist churches over 20 years found that new ministers with a history of growing membership and donations made similar improvements to new churches after being transferred (Pfeffer & Blake). A study of major league baseball coaches found that better managers boosted team performance (Kahn). A 40-year study of labor and capital productivity in the automobile industry found that leadership had an impact on firm performance (Lieberman, Lau & Williams).

Landmark research by psychologist Dean Keith Simonton similarly concluded that approximately 10% of contributors frequently account for 90% of contributions (Simonton). This is analogous to the “80/20 rule” where 80% of work is typically done by 20% of those involved. Similarly, one study found that only 16 composers out of 251 had produced roughly 50% of the classical music that is now performed and recorded (Sackman, Erikson & Grant). The best and brightest have a disproportionate impact.

Our Analysis: Great teams are, by definition, better than bad teams. This is not in dispute. However it is quite another thing to assert that great teams are predictive of superior firm performance. Are startups with great leaders statistically more likely to survive than startups without great leaders?

To test the predictive validity of the “great leadership” variable, 100 startups were separated into two categories (50 that survived, and 50 that were shut down). A number of leadership-related classification schemes were then tested against the sample.

Conclusion 1: Highly subjective. The most obvious challenge in attempting to make predictions on the basis of “great” or “bad” leadership is the inherent subjectivity within the classification scheme itself. After all, what makes a great team “great”? Experience? Education? Track record? Intellectual horsepower? Intra-industry expertise? Extra-industry expertise? Height? Weight? Eye color? Animal spirit? Other? What is “great”? Leadership can be largely intangible. Therefore a relatively limited number of easily measured factors were tested in this study. Considerations beyond these factors were not tested and therefore will not be addressed here.

Conclusion 2: Not predictive. Acknowledging the challenges of this subjectivity, the following potentially leadership-related attributes were tested in this sample (with their obvious limitations):

Total years of higher education held by the leadership team (Bachelor’s degree or higher): No statistically significant correlation to firm survival or failure
Years of work experience post-higher education: No correlation
Years in same industry: No correlation
Years in “big companies” ($500 million in annual revenue or more): No correlation
Years in “startups” (0-3 year old firms): No correlation
Years in professional consulting industry: No correlation
Number of team members with MBA degrees: No correlation
Number of team members from Ivey League schools: No correlation
Total team age: No correlation
Age of CEO/Leader: No correlation

Secondary Research: As stated earlier, this analysis was a limited attempt to address a much broader question. To more fully explore the issue, other external studies were reviewed.

An analysis of intelligence quotient (IQ) found that IQ is the most powerful predictor of job performance across studies, but still seldom correlated more than 0.4 with performance. In other words, IQ did not account for approximately 84% of performance (Pfeffer & Sutton).

The impact of changes in leadership was studied across 167 companies over a 20-year period and concluded that company and industry have far larger effects on sales and profits than leadership (Lieberson & O’Connor). Leadership studies of large samples of CEOs, University Presidents and Managers of sports teams showed that organizational performance was largely determined by factors beyond a leader’s control (Pfeffer). Several studies have also shown that changing CEOs has no statistically significant impact on organizational survival or death (Carroll and Hannan).

A wide review of leadership studies as far back as 1977 found that, while leaders have some impact, their actions rarely explain more than 10% of the difference in performance between the best and worst organizations and teams (Pfeffer & Sutton).

Summary: Bad, dysfunctional teams can have an infinite ability to destroy any business. No argument there. However this experiment found that the tested factors did not create statistically higher likelihoods of firm survival, and secondary research suggests that teams can have an impact - but less than you might think.

We conclude that teams with the tested qualities may indeed be nice to have, but they were not significantly predictiveof survival or failure in our sample. While a seemingly anticlimactic finding, it does suggest that betting on the "jockey" (leadership team) and not the "horse" (business itself) can easily lead to bad decisions by managers and investors alike. Good and bad teams - as defined in our samples - failed at the same rate. Perhaps the horse deserves a second look after all.

Sources:

Pfeffer & Blake, Administrative Succession and Organizational Performance: How Administrative Experience Mediates the Succession Effect, Academy of Managemnet Journal 29 (1986)
Kahn, Managerial Quality, Team Success, and Individual Player Performance in Major League Baseball, Industrial and Labor Relations Review 46 (1993)
Lieberman, Lau & Williams, Firm-level Productivity and Management Influence: A Comparison of U.S. and Japanese Automobile Producers, Management Science 36 (1990)
Simonton, Greatness: Who Makes History and Why, Guilford Press (1994)
Sackman, Erikson & Grant (1968), republished by Brooks Jr., The Mythical Man Month, Addison-Wesley (1995)
Pfeffer & Sutton, Hard Facts, Dangerous Half-Truths & Total Nonesense; Profiting from Evidence-Based Management, Harvard Business School Press (2006)
Lieberson & O’Connor, Leadership and Organizational Performance: A Study of Large Organizations, American Sociological Review 37 (1972)
Pfeffer, The Ambiguity of Leadership, Academy of Management Review 2 (1977)
Carroll & Hannan, The Demography of Corporations and Industries, Princeton University Press (2000)

Author:
Thomas Thurston is President of Growth Science International, LLC, a research firm that predicts if businesses will survive or fail. A former venturing professional at Intel, Thomas serves on multiple boards including the Revenue Capital Association. He holds an MBA, JD, was an Attorney for startups (OSB#044359) and was honored as a Research Fellow at the Harvard Business School.

Interview about the future of Entrepreneurship in the United States

Tue, 22 Feb 2011 04:00:00 GMT

John Tyler: The Outlook for Entrepreneurism in America

Watch this interesting interview with John Tyler, General Counsel and Chief Ethics Officer for the Kauffman Foundation. The Kauffman Foundation is one of the largest and most effective centers supporting entrepreneurism in America. Mr. Tyler addresses how we can enhance the entrepreneurial ecosystem in the United States in order to grow and develop our economy and create jobs. How many new startups would we need per year to have an impact on our economy? And why does Mr. Tyler believe we need more start up companies to fail faster? What can we do to make entrepreneurship easier for everybody?

Is America losing its edge compared to the growing entrepreneurial ecosystems of India and China?

What Kauffman Foundation programs are available to assist entrepreneurs in the United States? What is Kauffman Foundation doing to assist minority and women entrepreneurs to grow their businesses and provide better access to capital?

Are business schools teaching entrepreneurship the way they ought to?

Watch now and let me know what you think!

Interview with John Tyler

India: Angel Investment Opportunities with MFIs

Tue, 25 Jan 2011 23:30:00 GMT

This month I took a trip to India for 3 weeks to study the microfinance industry. MFIs in India are in a position where they are unable to collect savings due to government regulation, so they rely on private equity as a way to raise the capital to fund loans. Currently, the microfinance industry is going through a small crisis in India due to threats of increased government regulation, but many MFIs are still looking for funding to grow their business. Some MFIs are even expanding their business by offering larger loans to clients that have completed several successful loan cycles and are now ready for more capital or to new clients that have SME-sized businesses. The SME segment of the market in India is relatively un-serviced by commercial banks. MFIs offer loans to micro-entrepreneurs and banks offer loans to large businesses, but many small and medium sized enterprises are left without access to substantial funding. These businesses are often referred to as the “missing middle” by industry experts. Many MFIs are expanding their models to service these “missing middle” clients and have become very successful in this segment.

I spoke with several players in the microfinance industry in India, and the main focus for most organizations is raising capital in a way that will grow the business without sacrificing the social mission. There have been a few big players in the industry that have taken private equity capital and have had to raise interest rates and change the organization’s mission in order to answer to investors. Many MFIs are looking for an alternative investment, such as patient capital, in order to grow the business while maintaining the social impact. Some MFIs have turned to angel investors from the US as an alternative to private equity. The angel investor community is not strong in India, but there are several angel investors from the west who have chosen to invest in India. Angel investors offer MFIs a smaller amount of capital than a traditional PE firm, but demand a more reasonable return (20-25%), and a more hands-off approach to managing the business.

Overall, there are many opportunities for angel investment in India. In the MFI industry alone, there are many exciting opportunities to invest in organizations that have a strong and developing client base, grow at 50% or more each year, are expanding to give loans to SMEs, and have highly educated and experienced leadership. Angel investors that want to make a difference in a developing country by investing in organizations that create jobs and livelihoods while also earning an adequate return on investment should look into the MFI investment opportunities in the growing markets of India.

Ask an Angel: How do I become an Angel Investor?

Sun, 16 Jan 2011 08:41:00 GMT

The following excerpt is from an Angel Capital Association article on December 21, 2010. The full article can be found at the Angel Capital Education Foundation website.

ASK AN ANGEL: HOW DO I BECOME AN ANGEL INVESTOR?

December 21, 2010

We asked three experienced angel investors, Jean Hammond of Hub Angels Investment Group, Launchpad Venture Group, and Golden Seeds, all located in the Boston area; Bob Goff, founder and chairman of Sierra Angels of Incline Village, NV and recipient of the Hans Severiens Award; and Steven Mercil of RAIN Source Capital in St. Paul, MN and lead instructor of the Power of Angel Investing, to talk about the what, why, and how of becoming an angel investor.

ACEF: Just to level set, why do people get into angel investing?

JH: There are lots of rational reasons. Early stage equity investing done directly is a good asset class. Done right, this asset class can out-perform other things. You get to use your smarts, your Rolodex, and your ability to interact with other smart people to the benefit of your investment. You know the person you are investing in. It is local. It is creating jobs right in your neighborhood. There is the sense of being there and doing the right stuff. All of those things make a combination of rational, economic, and morale good sense.

For me, the working with smart people and the energy from the smart entrepreneurs is a blast.

ACEF: So how do people figure out if they want to be an angel investor or not?

SM: We get questions from investors about how to become involved with angel investing almost every week. Most of our inquiries are people who have made money and want to leave some kind of legacy and pass their experience and knowledge on to someone else as well as make an ROI. They want to help an entrepreneur grow a business and experience the challenges. They know this is important work.

First, they need to be an accredited investor according to the Securities and Exchange Commission.

JH: Assuming that's the case, there are three basic paths for potential angels that I've seen. One is to have been an entrepreneur and internalized the receiving of investments process to the extent that you now feel comfortable being on the other side.

The second is to go and see how other people do it and shop for an angel group that works for you. This works best where there is more than one angel group and existing activity. Many times people come as guests to angel group meetings. They listen to other people talk about the decision to be an angel at a fairly high level and then down to more nuances.

The last path is more like an apprenticeship. Find someone who is doing angel investing-maybe someone who is blogging or is around your area-who is willing to have you tag along.

ACEF: Angel investing takes time as well as money.

SM: That's right. If you are going to be an angel investor, you have to decide how much time you can commit to this activity. If you don't have the time to be involved, if you want to invest passively, then invest through a professional venture capital manager.

BG: For general education on entrepreneurship and angel investing, we suggest people visit the Kauffman Foundation, Angel Capital Association (ACA), and ACEF Web sites which contain a wealth of valuable information. We also encourage all new Sierra Angels members to participate in a Power of Angel Investing seminar, preferably in their first year.

SM: I also steer people to the ACEF and the ACA sites. If they don't know much about angel investing, I highly recommend they attend one of the Power of Angel Investing (PAI) programs. Almost every time I've taught a course, there is a percentage of audience that has not been familiar with angel investing at all.

JH: We are doing classes here in the Boston area that will include a session on "so you want to be an angel." This will tell participants whether they want to be an angel and what they feel comfortable with.

SM: I also recommend that a person think about the kinds of companies-industry, stage, and location-they like to deal with and how much of their net worth they are willing and able to put at risk.

ACEF: Let's talk about risk. Angel investors seem to have a tolerance, almost an appetite for risky deals.

BG: Investing in any early stage businesses is inherently highly risky. Within an asset allocation context, this segment should generally represent no more than a single digit percentage of net worth (except, perhaps, in special situations). However, when done well and right it can be a highly rewarding activity.

JH: I'm of the opinion that people have an understanding of their own risk profile that helps them figure out whether or not they should be an angel investor and how early a stage of angel investor they want to be. I also think that understanding doesn't come from an extremely rational place.

The other day I heard myself saying that super-early stage angels are born not made. The list of people who like really early stage investing is small.

By their nature, lots of angel groups tend to end up at the "mid-stage" of what is actually the early stage of a company. They skew toward what I would consider a stage of risk that is often equated with market entry stage. The company has something ready to sell and they have to find people to buy it. The reason groups end up a bit later than individual angels is that by the time a diverse set of people feel ready to write a check-the company is at a later stage.

SM: Often angels need to be prepared to make more than one investment in the company. They need to assess whether they can create a viable portfolio within the limits of the time and money they have to invest.

Have entrepreneurs lost their spirit in the U.S.?

Wed, 12 Jan 2011 16:36:00 GMT

Entrepreneur magazine had an article in their December issue about the decline in the entrepreneurial spirit in the U.S.

"The Small Business Administration recently did a study that showed that the U.S. has dropped to third place from first place when it comes to fostering entrepreneurial creativity and zeal. The U.S. now ranks behind Denmark and -brace yourself- Canada! So what are we doing wrong?"

Here are some answers given by Entrepreneur magazine readers:

Complacency
The cost of insurance, licensing, small business taxes and hiring employees is astronomical. Most mom and pop businesses are on a shoestring budget.
Americans are not developing new technologies to sell on the global market. We need to slow down our consuming and increase production in order to export more goods.
By the time young executives get out of student loan debt, they are at a point in their lives where it is hard to take the risk of entrepreneurship. There are student loan forgiveness programs for teachers...why not entrepreneurs?
Running a business is like balancing on a log in the water. Fancy footwork will keep you up, but it takes a bulldog tenacity to stay there. With so much negativity, undermining, and unpatriotic chin-way, it discourages honest, hard-working people from giving it a go
The education system is our main problem. There are no programs readily available to foster entrepreneurial spirit
Bureaucracy

Does the U.S. have a problem with a lack of entrepreneurial spirit? Why do you think the entrepreneurial spirit has declined? What can we do to get it back?

Financial Reform Act Changes Affect Angels & Entrepreneurs

Tue, 04 Jan 2011 18:51:00 GMT

The financial reform bill - now known as the Dodd-Frank Wall Street Reform and Consumer Protection Act - became law on July 21st when President Obama signed the act.

There are two sections in the approved legislation of particular interest to angels:

* Section 413, Adjusting the Accredited Investor Standard (pages 202-203)

* Section 926, Disqualifying Felons and Other "Bad Actors" from Regulation D Offerings (page 476)

The final legislation removed the provisions that concerned ACA related to Regulation D - so there is no 120-day waiting periods for approval of offerings and no patchwork of different state regulations for entrepreneurs raising capital.

Instead, Section 926 adds more abilities for regulators to stop Regulation D private offerings from "bad actors." The final act also eliminated automatic inflationary increases to the definition of "accredited investor" that would have decreased the number of angels in angel groups by about 60 percent (based on source data from the "Returns of Angels in Groups" academic study).

However, Section 413 does include compromise language for net worth requirements, which stay at $1 million but exclude primary residence from the calculation.

IMPORTANT: The change in the net worth definition for accredited investors is effective right now. Securities and Exchange Commission staff have been quoted that the new standard is in place on the date of the enactment of the law (which happened July 21st.)

More information about the efforts to ensure improvements to the original bill can be found on the Angel Capital Association website, where this article originally appeared. Click here.

Recent Tech Valuations Worry Startup Entrepreneurs

Sat, 25 Dec 2010 21:31:00 GMT

As valuations soar, tech field starts feeling bubbly

By Laurie Segall, staff reporterDecember 20, 2010: 11:25 AM ET

NEW YORK (CNNMoney.com) -- On any given day at Grey Dog, a small restaurant in downtown New York, you'll find clusters of engineers and entrepreneurs crowded around tiny wooden tables discussing their startups' latest creations.

The high ratio of techies to tables isn't surprising. DogPatch Labs -- an office space that houses more than 10 companies backed by venture capital firm Polaris Ventures -- is right around the corner. One street south, a variety of startups rent desks at TechSpace. A number of Union Square Ventures-backed companies work in the area. And TechStars, a mentoring-and-seed-cash program that just selected finalists for its first crop of New York startups, is right around the corner.

Within a few densely packed urban blocks, dozens of tech startups are cranking out code. And investors want in. Early.

Which has tech veterans a bit nervous.

The murmuring started months ago, with early-stage investors moaning about soaring valuations and venture funds shifting their cash toward Internet upstarts. Then a widely circulated dispatch from New York venture capital doyen Fred Wilson yanked the conversation out into the open.

"I think the competition for 'hot' deals is making people crazy and I am seeing many more unnatural acts from investors happening," he wrote last month in an ominous blog post titled "storm clouds."

Things have intensified since then. Google (GOOG, Fortune 500) tried -- and failed -- to snap up daily-deals darling Groupon for a rumored $6 billion. Twitter sucked in $200 million more from investors, giving the company a valuation of nearly $4 billion. Kleiner Perkins is raising more than $1 billion for new venture capital funds -- and lured Wall Street's star Internet analyst, Mary Meeker, to Silicon Valley to spot investments for them.

Wilson avoided using the term "bubble," but others aren't shying away. Angel investor and Wine Library TV host Gary Vaynerchuck thinks a "huge bubble" is inflating.

"I'm seeing a lot of companies get $5 million to $15 million valuations now on their first seed rounds that have no anything," he says. "At least they're a little bit more practical than 2000, when people got crazy."

Hot deals "are incredibly competitive, which pushes up valuations," says TechStars director David Tisch.

Two worries. First: Bubbles artificially prop up weaker ventures and disrupt market Darwinism.

"I do worry about companies that shouldn't get funded, getting funded," says Chris Dixon, an active Silicon Valley angel investor whose portfolio includes Skype and Foursquare.

"When you have great talented people all starting their own company, the companies that are trying to hire are getting hurt because they're not able to hire," Tisch says of the brewing talent war. Exhibit A: Google's recent decision to hike its workers' pay by 10% across the board.

Second problem: This kind of thing usually ends in tears. Bubbles burst, and the last time that happened it blew a crater in the U.S. economy and froze tech investing for years.

Which is why those who think things are getting frothy wouldn't mind hearing some pops.

Lawrence Lenihan, managing director of New York-based FirstMark Capital, thinks there will be a few high-profile flameouts.

"My prediction of what will happen is that there could be a meltdown in the New York tech scene," he says. "But it's like a forest fire: It's good, it clears out the dead wood."

Tisch thinks a bust "would help everybody on some level. A realignment of the early stage stuff would be a benefit to quality companies."

But here's the silver lining: Some of the dot-com debacle's lessons stuck.

Most of the billions being plowed into the tech scene's hottest startups right now are coming from venture capitalists and rich angels -- not retail investors sucked along by an IPO tsunami. And those VCs say they're planning carefully for the market's ups and downs.

"We are not pulling back. We are sticking with our investment strategy,"Fred Wilson says.

He thinks his last venture capital firm, Flatiron Partners, made two mistakes during the go-go '90s: It raised too much and spent it too fast. This time around, he's keeping a close eye on maintaining a slow and steady pace, adding six to eight companies a year to Union Square Ventures' portfolio.

Lenihan has a similar approach. His firm, which makes the majority of its investments in New York companies, will keep deploying its cash even if the market fizzles.

"This is not Silicon Alley," he says of the modern New York tech field. "This is not something where it's going to disappear off the map."

The tech industry itself has also changed. Thanks to open-source software and fast-improving tech tools, it's vastly cheaper to launch a Web startup now than it was 10 years ago. And for every Twitter -- a great idea in search of a business model -- there's a Groupon or Zynga: companies that mint money and are already solidly profitable.

As Dixon put it: "The tech sector is probably the brightest sector of the U.S. economy. It's real. It profits."

So in downtown in New York, techies will keep checking in at Grey Dog, where Tisch stopped in for breaks while culling through the stack of applications for TechStars NYC. The finalists -- who got the good news last week -- include ventures targeting fields ranging from data migration to social e-commerce to fashion.

Maybe one of them will be the next Google.

Check out this article at http://money.cnn.com/2010/12/20/technology/tech_startups_bubble/index.htm?hpt=T2

Can Arizona entrepreneurs attract foreign investment?

Tue, 07 Dec 2010 17:37:00 GMT

Arizona has the potential for global presence

by Kathleen Ingley - Dec. 4, 2010 05:34 PM
The Arizona Republic

A giant Canadian private-equity fund makes investments around the planet. Why not in Arizona?

The answer's simple: Nobody asks.

The Caisse de Depót in Montreal gets a constant stream of businesspeople pitching opportunities in places like New York and Chicago. But Arizonans aren't making those international sales calls.

Maybe it's a relic of the Old West, a lingering ornery notion of self-sufficiency. (Forget the fact that developing the West required massive infusions of capital and government money.)

But staying as disconnected as a cowboy on the open range makes no sense for modern Arizona.

"There is a lot of money looking for places to go in this world," according to R. Glenn Williamson, founder and CEO of the Canada Arizona Business Council. "There's no reason why Arizona shouldn't be on that map."

Foreign investment is just one place where we're missing out on the global economy. We should expand exports, attract companies and become a magnet for talented international workers and entrepreneurs.

Step 1 is to get rid of an inferiority complex.

"We sell ourselves very short," Williamson said last Wednesday in a breakout session at Global Arizona 100. The conference, co-sponsored by Science Foundation Arizona and the Morrison Institute for Public Policy at Arizona State University, is aimed at developing strategies and partnerships to make the state more internationally competitive.

The 200 attendees developed a set of recommendations to bolster international trade, which they'll share with the state's political and business leaders.

In Williamson's view, Arizona right now has "an adequate product to sell globally," with a good supply of small and medium-size businesses that are attractive for investment. This is one of the few places in the world with the capability to build aircraft "from tip to tail."

A true global strategy is a mix of action and mind-set. My checklist would include:

A state focal point

The fledgling Arizona Commerce Authority, a public-private partnership, needs a section to promote foreign trade. And the resources to support it.

A wide-angle lens

Arizona must encourage a global perspective at all levels of leadership.

This means putting up a strong fight against xenophobia. The issue of illegal immigration can't continue to obscure Mexico's importance as our No. 1 export market and the economic potential for various partnerships.

The urgent job of teaching children whose first language isn't English should not stop us from recognizing the competitive advantage of nourishing their linguistic skills. (Foreign-language skills in general need more respect and emphasis.)

Thinking regionally

Nearby states and metro areas aren't always competitors. They can be partners in a megaregion that includes Utah, Southern California and New Mexico. That can create demand and economies of scale that could, for instance, build overseas business for Sky Harbor International Airport.

Within Arizona's borders, cities need to have a team strategy for global economic development, presenting a common message and avoiding destructive rivalry.

Smart immigration rules

Arizona's delegation should push for an immigration policy that supports economic development. Goodyear made creative use of incentives to land the first U.S. plant for China-based Suntech, the world's largest manufacturer of solar panels. But when the company wanted to bring a plant manager from China, it couldn't get a work visa.

Promising foreign students get engineering and science degrees at Arizona universities and then take their skills and training home because potential employers don't want to tangle with the complex visa process.

Schools

As the state looks at big cuts in K-12 and university funding, no one should ignore the economic impact. Former Intel Chairman Craig Barrett said in a breakout group: "Let's not shortchange education in Arizona, because no one's going to invest long-term without good education."

Going there

Even with the Internet, face-to-face contacts are important. Overseas travel has to shed its image as a junket. And we have to realize that multiple trips are often necessary.

Any major Arizona official who hasn't been out of the country should be sent on the next available trade mission, to get a firsthand view of the opportunities and the level of competition. The legislators who think rock-bottom costs are the deciding factor for corporate locations should check out the plants that Phoenix-based First Solar is building in Germany and France.

Building on local links

Arizona has a lot more international connections than most people realize, from the Russian Children's Center to the Indonesian American Association, and we should profit from them in as many ways as possible. The Greater Phoenix Global Guide, a just-completed ASU guide that catalogs a wide variety of groups and businesses, is a valuable new tool (check it out at skysong.asu.edu)

Endurance and persistence

Succeeding in the global economy requires doing the homework, cultivating the contacts and making the cross-connections. North Carolina knows how to do it, with an approach that includes heavy participation in trade missions and meticulous follow-up, said Margaret Mullen, chief operating officer of Science Foundation Arizona. "They constantly keep their name in front of the business community around the world."

This isn't a sprint, it's a marathon. And Arizona has the potential to be at the front of the pack.

Global Entrepreneurial Leadership by Robert Hisrich, Ph.D.

Tue, 30 Nov 2010 17:11:00 GMT

In today’s fluctuating economy, the notions of entrepreneurship, entrepreneurial leadership and entrepreneurial decision-making is receiving increased attention by citizens, academics, managers and politicians on a global basis. The current global financial crisis has put added pressure on creating new ideas and bringing these to the market resulting in financial fruition, economic development and employment. Being an entrepreneur and creating value by establishing a new organization in both the profit and non-profit sectors in business as well as the arts impacts both economic and social conditions. This creation process takes more time and effort than one can imagine and is by no means easy, with a high failure rate reaching over 70 percent in certain countries.

Since entrepreneurs are found in all professions—education, medicine, research, law, architecture, arts, engineering, social work and distribution—the definition of entrepreneurship in my book Entrepreneurship, 8^th edition (McGraw-Hill/Irwin, 2010) is relevant: “Entrepreneurship is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence.”

Global entrepreneurial leaders create visionary scenarios that assemble and mobilize participants who become committed by the vision to discovery and creation of sustainable value. They have a wide variety of attributes including being a visionary, having a passion for their idea, being a risk-taker, having perseverance, building a team, recognizing opportunities and needs, solving problems, and giving back. Let us look at a few examples.

Leonardo Da Vinci

In addition to his many other titles, Leonardo Da Vinci should be labeled as one of the great global entrepreneurial leaders of all time. It is in fact the breadth and depth of his work, his wide-ranging skills and his lasting impact on both the arts and society that reflect the strength of his entrepreneurial vision. Leonardo created many new and different pieces of art, devices, and ways of thinking that were ahead of their time.

Edward Teach (Blackbeard the Pirate)

From 1716-1718, Blackbeard the Pirate ruled the seas and was also an entrepreneurial leader who flourished in his trade. The pirates who joined Blackbeard’s command often came from the lowest classes of society or were former members of the British Navy, who found the conditions and treatment they received better than life on farms or plantations. All booty taken by the pirates would be divided evenly among the crew, one part each, save the captain’s two.

Peter the Great

Peter I (Peter the Great) ruled Russia from 1682 until his death in 1725, bringing about major modernization to his country. His global entrepreneurial vision and leadership gave Russia a new position of power as the country was transformed into a western empire; educators, military personnel and businessmen were invited to Russia; the army was modernized; a strong navy was developed; and arts and education flourished.

John Rockefeller

John Rockefeller was an extraordinary American entrepreneur and philanthropist. Through hard work, determination and a strong competitive nature, he became the world’s first billionaire. Rockefeller chose to change his entrepreneurial pursuits away from making money towards giving it away. From his equity position in Standard Oil, a company he co-founded, he felt the need to disperse his wealth to those less fortunate and formed the Rockefeller Foundation; this started the rise of American social philanthropy.

Madam CJ Walker

Entrepreneurs often find opportunities and success in spite of great odds and obstacles. Madam CJ Walker was one such person who identified a gap in the market—hair care products for black women. CJ Walker became the first self-made female black millionaire in the United States. At one point, she employed over 3,000 women and had a wide range of hair and skin care products.

Muhammad Yunus

Muhammad Yunus is an example of a selfless global entrepreneurial leader. After seeing the impact of his first micro-loan and the way in which he was repaid, Yunus began to envision a model that could work anywhere. He found that the poor would often quickly repay their loans with few problems. By the early 1980s, Yunus had expanded to other developing countries and in 1983 formed The Grameen Bank, the institutional home of his micro lending practices both of which were recognized with a Nobel Peace Prize in 2006.

Bill Gates

Microsoft founder Bill Gates’ entrepreneurial skills are varied. His company revolutionized the computer industry, ushered in the internet age, and had a deep and profound impact on the daily lives of people around the world. Because of this persistence and risk taking, he shaped the evolution of the information age making Bill Gates the world’s richest man in 1995. In 2000, the Bill and Melinda Gates Foundation was founded with the goal of alleviating many of the problems that are afflicting the world’s poorest people and has grown into one of the premier philanthropic organizations in the world.

The role of global entrepreneurial leaders throughout history indicates the diversity in backgrounds, mindsets and goals that spawn entrepreneurial actions, decisions and leadership. From public sector to private, for-profit to non-profit, in science, arts, religion, medicine, politics and business, and across industries, the variety of forms that entrepreneurial leadership takes is clear.

For the contemporary entrepreneur who actually starts his or her own business, the experience is filled with enthusiasm, frustration, anxiety and hard work. There is a high failure rate due to poor sales, intense competition, lack of capital, or lack of managerial ability. The financial, social and emotional risks are high, as are the rewards. As history has shown, the individual’s reward can easily set the stage for an accelerated impact on the larger community, region, country, or even the world.

Robert D. Hisrich, Ph.D. is the Garvin Chair of Entrepreneurship and Director of the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management. He is the author of numerous publications and books including the textbook, Entrepreneurship; the most widely used text on the subject, published in nine languages. A self-described serial entrepreneur, Dr. Hisrich has established and sold numerous companies.

Investors attend Invest Southwest Capital Conference 2010

Mon, 29 Nov 2010 22:19:00 GMT

Invest Southwest Capital Conference December 8-10, 2010

CONNECTING INVESTORS TO THE REGION’S MOST PROMISING VENTURES

Invest Southwest is the premier capital conference in Arizona and the Southwest. Since 1992, this event has connected the region’s most promising ventures with knowledgeable investors. On December 8–10, 2010, investors and venture capitalists from across the country will gather at the Four Seasons Resort Scottsdale at Troon North in Scottsdale to see the “Best of the Southwest” present their business plans and investment opportunities. These companies are ready for investment, and have participated in a competitive application process and an extensive mentoring period in anticipation of their conference presentation.

The event also includes an investor seminar, an internationally known keynote speaker, and presenting company exhibits and interactive sessions. For accredited investors only.

Here are some videos of conference sponsors and participants talking about why Invest Southwest is important for Arizona venture capital and entrepreneurship.

To register for the conference (accredited investors only) go to http://www.investsouthwest.org/register.html

The Angel Investor Market Q1/Q2 2010

Thu, 18 Nov 2010 17:16:00 GMT

From the Center for VentureResearch at the University of New Hampshire:

Market Size

The angel investor market in Q1,2 2010 showed signs of stabilization since the 30% market correction in the second half of 2008 and the first half of 2009. Total investments in Q1,2 2010 were $8.5 billion, a decrease of 6.5% over Q1,2 2009. However, a total of 25,200 entrepreneurial ventures received angel funding in Q1,2 2010, a 3% increase from Q1,2 2009, and the number of active investors in Q1,2 2010 was 125,100 individuals, a drop of 11% from Q1,2 2009. The decline in total dollars, coupled with the small increase in investments resulted in a smaller deal size for Q1,2 2010 (a decline in deal size of 9% from Q1,2 2009). These data indicate that while angels remain committed to this investment class they do so with a cautious approach to investing. Angels are committing fewer dollars in more deals, a result of the lower valuations. While the market exhibited a stabilization from Q1,2 2009, when compared to the market correction that occurred in 2008, these data indicate that the angel market appears to have reached its nadir in 2009.

Stage

Angels have decreased their appetite for seed and start-up stage investing, with 26% of Q1,2 2010 angel investments in the seed and start-up stage, marking a steady decrease in the seed and start-up stage that began in 2008 (45%) and 2009 (35%), and it is the smallest percentage in seed and start-up investing for several years. This decline was reflected in an increase in postseed/start-up investing with 56% of investments in this stage.

Historically angels have been the major source of seed and start-up capital for entrepreneurs and this declining interest in seed and start-up capital represents a significant change in the angel market. Without a reversal of this trend in the near future, the dearth of seed and start-up capital may approach a critical stage, deepening the capital gap and impeding both new venture formation and job creation. This change in investment behavior is likely an indication of both a need to increase investments in existing portfolio companies in order for these portfolio companies to survive the recession and an extended exit horizon. Expansion stage investing (14%) remained unchanged. New, first sequence, investments represent 46% of Q1,2 2010 angel activity, a decline of 12% in the last year.

Sector Analysis

Healthcare Services/Medical Devices and Equipment accounted for the largest share of investments, with 24% of total angel investments in Q1,2 2010, followed by Biotech (20%), Software (12%), Industrial/Energy (11%), which reflects a continued appetite for green technologies, Retail (9%) and Media (5%). Retail and Media have solidified their presence in the top six sectors, mainly due to a continued interest in social networking ventures.

Deals by Sector: Healthcare (24%), Biotech (20%), Software (12%), Industrial/Energy(11%), Retail (9%), Media (5%)

Latent Angels

If the angel market is to achieve sustainable growth there needs to be a reasonable augmentation in active investors, and thus, level of participation is an important consideration. While the number of angel organizations, and individuals that are members of organized angel groups, is increasing, there is a significant percentage of latent angels (individuals who have the necessary net worth, but have not made an investment). In Q1,2 2010, 65% of the membership in angel groups was latent angels, which is an increase from 2009 (54%) and 2008 (36%). This significant percentage of latent investors indicates that while many high net worth individuals may be attracted to angel groups, they have not converted this interest into direct participation. This increase in latent angels may be the result of the longer exit horizon and in general be indicative of the lack of seed capital and the need for research to move the latent angel to the active investor.

Yield Rates

The yield (acceptance) rate is defined as the percentage of investment opportunities that are brought to the attention of investors that result in an investment. In Q1,2 2010 the yield rate was 12%, continuing a stabilization in yield rates that began in 2008 (10%) and continued in 2009 (14.5%). This yield rate indicates a cautious approach to investing, reduces the concern of an unsustainable investment rate, but also reflects an increased difficulty for entrepreneurs to secure angel funding.

Women and Minority Entrepreneurs and Investors

In Q1,2 2010 women angels represented 18% of the angel market. Women-owned ventures accounted for 11% of the entrepreneurs that are seeking angel capital and 14% of these women entrepreneurs received angel investment in Q1,2 2010. Thus, while the number of women seeking angel capital is low, the percentage that receives angel investments is in line with the overall market yield rate. Minority angels accounted for 4% of the angel population and minority-owned firms represented 6% of the entrepreneurs that presented their business concept to angels. The yield rate for these minority-owned firms was 23%, which for the third straight year is in line with, or higher than, market yield rates. However, the small percentage of minority-owned firms seeking angel capital is of concern.

The Center for Venture Research (CVR) has been conducting research on the angel market since 1980. The CVR’s mission is to provide an understanding of the angel market through quality research. The CVR is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers.

The response rate for this survey was 37%.

Entrepreneurs Unite during Global Entrepreneurship Week!

Mon, 15 Nov 2010 23:14:00 GMT

Global Entrepreneurship Week: November 15th-21st

This week is Global Entrepreneurship Week. Nearly 100 countries participate in GEW every November, and each year there are more than 40,000 events that occur around the world with over 10 million participants.

The United States is second (UK is first) on the list of countries participating with 414 scheduled events and 37,665 people participating.

What featured events are happening during the Week?

There are a number of featured events that demonstrate the global scope and scale of the initiative. Some of these featured events include:

Global Cleantech Open Ideas Competition 22 countries

Speednetwork the Globe 50 countries

Startup Weekend 15 cities around the world

Global Student Entrepreneur Awards 8 countries

Creativity World Forum 12 Districts of Creativity 12 countries

EO 24 38 countries

Your Big Year England

La Fête de l’Entrepreneur France

YBI Global Forum Mexico

The Hunger Project Sweden

Global Entrepreneurship Week has several great sponsors:

Source: http://www.unleashingideas.org/

Check out the list of ASU's Global Entrepreneurship Week events (some are open to the public)

ASU GEW events

CANCELED: Thunderbird Angel Network Dinner November 17th

Sat, 13 Nov 2010 19:12:00 GMT

The Thunderbird Angel Network dinner scheduled for November 17th has been canceled due to unforeseen circumstances.

The TAN dinner meetings will resume on the next scheduled TAN dinner date, January 20th, 2011 on the Thunderbird campus. The evening will begin with a networking reception at 5:30pm, dinner will begin at 6:00pm, followed by due diligence reports and company presentations. The registration fee for the dinner meeting is $40.00.

Thunderbird Angel Network dinners are open to accredited investors only- please refer to our Investor Fact Sheet to learn more about being an accredited investor. You can download the Investor Fact Sheet from under the Investor tab on our website.

New companies seeking investment will present at the January 20th dinner:

Companies to be announced by January 9th

To reserve your place and make your payment for this dinner, click here to register and you will be redirected to a secure payment link.

The next four dinner meetings scheduled for the Thunderbird Angel Network:

January 20, 2011 March 24, 2011

May 19, 2011 September 22, 2011

Upcoming Thunderbird Angel Dinner November 17th

Thu, 11 Nov 2010 04:59:00 GMT

Register today for the next Thunderbird Angel Network Dinner on Wednesday, November 17th!

Since the Thunderbird Angel Network was recently launched in October, the member dinners are currently open to non-members. We believe that investors interested in becoming members of the TAN may attend one meeting as a non-member before joining. Only accredited investors may attend the TAN meetings. For information on the definition of an accredited investor, please see the Investor Fact Sheet located on the Investor section of our website.

The next TAN dinner meeting will be held Wednesday, November 17th at the Thunderbird School of Global Management campus. The networking reception will begin at 5:30 p.m. and dinner will begin at 6:00 p.m. Following dinner, the due diligence team will present and then the new companies will present. The registration fee for the dinner meeting is $40.00.

New companies seeking investment will present at the November 17th dinner:

Companies to be announced by November 14th

To reserve your place and make your payment for this dinner, click here and you will be redirected to a secure payment link.

The next scheduled dinner meeting for the Thunderbird Angel Network is January 20, 2011.

Difference Between Venture Capitalists and Angel Investors

Wed, 10 Nov 2010 00:06:00 GMT

When an entrepreneur is ready with a business plan that he or she has researched, prepared, and is confident will be successful, the next step is to find funding. The funding should start with the entrepreneur. If you are not willing to put your own money and risk into your business, then why should anybody else? Next, the funding should come from sources like family and friends (also known as FFF: family, friends and fools). If your own family and friends aren't willing to invest in you, why should complete strangers? Finally, the next step is to find external funding from a bank, venture capitalists, or angel investors. Usually banks are unwilling to fund startup ventures that don't have 2-3 years of financial statements due to the high level of risk, and banks are especially risk adverse and not open to investing in small business during a recession. That leaves two 2nd round funding choices for entrepreneurs: venture capitalists and angel investors. So, what's the difference?

Angel investors are wealthy individuals who help entrepreneurs during the startup phase by providing seed capital, which is the capital that is required and utilized in starting and growing a business. An angel investor is more like your friends, family or fools than a bank or venture capitalist because an angel investor is more likely to give importance to the entrepreneur than the business model. Angel investors are usually entrepreneurs themselves and they like to help upcoming entrepreneurs, not only by providing the capital but also by mentoring.

A venture capital fund also invests in companies in the startup phase of the business, but can be defined as a pooled investment that uses the money from third-party investors, such as investment banks or wealthy individuals, to invest in business projects. A venture capital firm is an investment company that invests its shareholders' money in startups and other risky but potentially very profitable ventures.

Difference Between Venture Capitalists & Angel Investors:

In a startup business the angel investor comes into the picture earlier than the venture capitalist. Angel investors are usually the 1st or 2nd round of funding (seed or concept stage), while venture capitalists are usually the 3rd or 4th round of funding (growth stage).
Angel investors are individually wealthy whereas venture capital is usually pooled funds or an investment firm. Angel investors privately invest their own funds, while venture capital is usually a professionally-managed fund.
The amount of capital provided varies. Angel investors provide capital starting from $25,000 to $1M (approximate amounts depending on the deal). Venture capitalists generally do not consider deals less than $1-2M.
The process of obtaining funds is less rigorous in the case of angel investors, and very rigorous in the case of venture capitalists.
The terms and conditions put forth by venture capitalists are generally more stringent than angel investors.
Angel investors are sometimes said to invest "emotional money," while venture capitalists are said to invest "logical money".
Angel-funded startup companies are less likely to fail than companies that rely on other forms of initial financing.

Despite their differences, many angel investors work with venture capitalists to find the best investors for great startup companies. Check out the directory on our website for links to other angel investing groups and venture capital firms.

Are Angel Investors Angels or Demons?

Sat, 06 Nov 2010 05:36:00 GMT

According to the following article from the Economist, there have been allegations that "super angels" have been banding together to keep venture capital firms out of the startup business and to lower startup valuations. This conspiracy theory in the startup industry has recently caused apprehension in investors and entrepreneurs.

Read the full article from the Economist below:

"I WAS at Bin 38 and all I got was this lousy valuation", read the message on Dave McClure's T-shirt at a conference in San Francisco this week. The boss of 500 Start-ups, a fund that provides seed capital to entrepreneurs, Mr McClure had the shirt designed to ridicule an accusation that he and several other financiers have been colluding.

The charge was made by Michael Arrington, the founder of a blog called TechCrunch (which was sold to AOL this week). His claim has turned a spotlight onto "super angels", who run funds that invest in deals considered too small to be of interest to traditional venture-capital firms. In a blog post Mr Arrington said he recently gatecrashed a meeting at Bin 38, a San Francisco wine bar, at which he claimed a bunch of super angels were gathered "Godfather-style" to discuss things like how to counteract rising valuations of young firms and how to keep big venture funds out of deals.

"Angelgate", as it has been dubbed, sparked a furore in the start-up world. In an expletive-laden response on his own blog, Mr McClure called Mr Arrington's claim of conspiracy "bullshit" and said the angels' meeting focused on issues like how to boost access to start-up capital and how to get non-tech firms more interested in buying tech businesses.

It is hardly unusual for investors in Silicon Valley to compare notes. And Mr Arrington has yet to provide hard evidence of collusive behaviour. But the episode has exposed divisions in angels' ranks. Ron Conway, a well-known investor in tiny firms, has privately castigated some of his fellow super angels for having overinflated egos and for appearing too keen to make a fast buck.

All this matters because their clout has been growing. "Angelgate is a bit of a validation of super angels' influence," says David Hsuof the Wharton School. And competition is certainly getting stiffer. Established firms have rediscovered their appetite for seed funding: Greylock Partners, a well-known venture firm, this week said it had launched a $20m seed fund. That will make heavenly returns even harder to come by.

Source: Economist; 10/2/2010, Vol. 397 Issue 8702, p82-82, 1/2p

Angel Investors Investing Less?

Thu, 04 Nov 2010 20:46:00 GMT

UNH Center For Venture Research: Angel Investors Flee Seed and Start-Up Stage in First Half of 2010

October 26, 2010

According to the Angel Market Analysis done by University of New Hampshire's Center for Venture Research, angel investors committed fewer dollars in more deals in the first half of 2010, the lowest level in several years. This trend could soon impact new ventures and job creation.

Total investments in the first half of 2010 were $8.5 billion, a decrease of 6.5 percent over the first half of 2009.

A total of 25,200 entrepreneurial ventures received angel funding in the first half of 2010, a 3 percent increase from the same period in 2009, and the number of active investors in the period was 125,100 individuals, a drop of 11 percent from the same period in 2009. The decline in total dollars, coupled with the small increase in investments, resulted in a 9 percent decline in deal size for the first and second quarters of 2010 compared with 2009.

“These data indicate that while angels remain committed to this investment class they do so with a cautious approach to investing. Angels are committing fewer dollars in more deals, a result of the lower valuations,” said Jeffrey Sohl, director of the UNH Center for Venture Research at the Whittemore School of Business and Economics.

“Historically angels have been the major source of seed and start-up capital for entrepreneurs, and this declining interest in seed and start-up capital represent a significant change in the angel market. Without a reversal of this trend in the near future, the dearth of seed and start-up capital may approach a critical stage, deepening the capital gap and impeding both new venture formation and job creation. This change in investment behavior is likely an indication of both a need to increase investments in existing portfolio companies in order for these portfolio companies to survive the recession and an extended exit horizon,” Sohl said.

Healthcare services/medical devices and equipment accounted for the largest share of investments, with 24 percent of total angel investments in Q1 and Q2 2010, followed by biotech (20 percent), software (12 percent), industrial/energy (11 percent), which reflects a continued appetite for green technologies, retail (9 percent) and media (5 percent). Retail and media have solidified their presence in the top six sectors, mainly due to a continued interest in social networking ventures.

The Center for Venture Research has been conducting research on the angel market since 1980. The center’s mission is to provide an understanding of the angel market and the critical role of angels in the early stage equity financing of high growth entrepreneurial ventures. Through the tenet of academic research in an applied area of study, the center is dedicated to providing reliable and timely information on the angel market to entrepreneurs, private investors and public policymakers. For more information visit http://wsbe.unh.edu/cvr or contact the center at 603-862-3341.

Source:http://www.unh.edu/news/cj_nr/2010/oct/lw26market.cfm

The Arizona Republic: Network Matches Investors and Startups

Tue, 26 Oct 2010 17:05:00 GMT

THUNDERBIRD ANGELS MEET ENTREPRENEURS

by Lesley Wright - Oct. 25, 2010
The Arizona Republic

Thunderbird School of Global Management is holding its inaugural dinner meeting for the Thunderbird Angel Network at 5 p.m. on Thursday.

The network seeks to introduce qualified investors to entrepreneurial companies that are in the early stages of business.

Featured enterprises include a technology company with a touch-pad for industrial systems, an educational video-game developer, the maker of a device that protects children online, and the developer of technological feet prostheses.

To reserve a seat, go to thunderbirdangelnetwork.org, e-mail thunderbirdangelnetwork@gmail.com or call Dee Harris at 602-840-4078.

The registration fee is $40.

More About Angel Investor Forums

Fri, 22 Oct 2010 18:15:00 GMT

An Angel Investor Forum, such as the Thundberbird Angel Network, is usually a member of the Angel Capital Association.

The Angel Capital Association is North America's professional alliance of angel groups. The association brings together many of the angel organizations in the United States and Canada to share best practices and collaboration opportunities. ACA provides excellent professional development and discounts on important services for angel investors who belong to member groups, and also serves as the public policy voice of the American angel community. A directory of other ACA member angel investor forum groups is available on this site.

The Angel Capital Association is an organization sponsored by the Kauffman Foundation, that is focused on developing best practices for the operation of angel organizations across North America.

The Ewing Marion Kauffman Foundation was established in the mid-1960s by the late entrepreneur and philanthropist Ewing Marion Kauffman. Based in Kansas City, Missouri, the Kauffman Foundation is among the thirty largest foundations in the United States with an asset base of approximately $2 billion.

Its vision is to foster “a society of economically independent individuals who are engaged citizens, contributing to the improvement of their communities.” In service of this vision, and in keeping with the founder’s wishes, they focus grant making and operations on two areas: advancing entrepreneurship and improving the education of children and youth.

Today, the Kauffman Foundation is the largest American foundation to focus on entrepreneurship and has more than fifteen years of in-depth experience in the field. Leaders from around the world look to them for entrepreneurship expertise and guidance to help grow their economies and expand human welfare. Their Entrepreneurship team works to catalyze an entrepreneurial society in which job creation, innovation, and the economy flourish. They work with leading educators, researchers, and other partners to further understanding of the powerful economic impact of entrepreneurship, to train the nation’s next generation of entrepreneurial leaders, to develop and disseminate proven programs that enhance entrepreneurial skills and abilities, and to improve the environment in which entrepreneurs start and grow businesses.

In late 2008, the Foundation embarked on a long-term, multimillion-dollar initiative known as Kauffman Laboratories for Enterprise Creation, which, through a set of innovative programs, is seeking to accelerate the number and success of high-growth, scale firms.

Global Entrepreneurship is one of the 3 pillars of the unique Thunderbird curriculum and approach to global management education. Our entrepreneurship center of excellence, The Walker Center for Global Entrepreneurship, is the vehicle through which we support entrepreneurship and entrepreneurs in a variety of ways.

The Thunderbird Angel Network, as an angel investor forum and future applicant of the Angel Capital Association, as well as its members and extended community, are fortunate indeed to have access to the many resources and leadership that both the ACA and the Kauffman Foundation make available to those who believe in the essential role and value of entrepreneurship in economy and society.

What is an Angel Investor?

Fri, 22 Oct 2010 17:44:00 GMT

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. en.wikipedia.org/wiki/Angel_investor

A person who provides backing to very early-stage businesses or business concepts. Angel investors are typically entrepreneurs who have become wealthy, often in technology-related industries. www.wrhambrecht.com/ind/private/glossary/index.html

Angel investors are usually high-net-worth individuals who make direct equity investments in companies. (See Equity capital) www.financenewmexico.org/glossary.html

Investor's that prefer to invest in early-stage companies. www.knowledgedynamics.com/demos/BreakevenFlash/GlossaryMain.htm

An individual investor who invests in a start-up that is unable to raise venture capital....more on Angel investors
moneyterms.co.uk/

An angel investor is an individual who makes direct investment of personal funds into a venture, typically early-stage businesses.
carlsbad-tg.com/Glossary_of_Terms_1.php

An angel investor may be a firm or an individual who invests in startup companies. Angels rarely get involved in the actual management of the companies in which they invest, but they provide enough capital to bring a product to production stage.
www.brighthub.com/office/entrepreneurs/articles/46940.aspx

New Federal Law: Zero Taxes on Gains on Small Business Investments

Tue, 12 Oct 2010 18:49:00 GMT

Last week, President Obama signed the Small Business Jobs Act of 2010, which includes several benefits for small businesses and also a benefit for angel investors. We want to get this information out to you, as this benefit relates to investments made between September 27 and December 31, 2010 and may be of interest to many of you.

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock, and this new bill effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply.

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.

Criteria and Limitations:

Investments must be made by a non-corporate investor (for example, individuals or funds structured as LLCs).
Investments must be made between September 27 and December 31, 2010 to qualify for no taxes on the gains.
The company in which you invest must be a C corporation and must be a qualifying type of business (many businesses except financial institutions, farms, professional service firms, hotels, and restaurants)
The company in which you invest must not exceed $50 million in aggregate gross assets at any time before the investment or immediately afterward. An important issue in this size is that 80% of the assets must be used in the "active conduct" of the business at all times.
The stock must be purchased by the investor as an original issuance from the corporation, directly or through an underwriter. So, notes and warrants do not count. We're hearing that if you have an outstanding note that converts to stock before December 31st, then the stock would count for this program. (BUT TALK TO YOUR ACCOUNTANT.)
The stock must be held for more than five years (subject to exemptions for qualifying tax-free rollovers)
There are limitations on redeeming shares of the company's stock before and after the qualified stock is issued.
The gains eligible for the zero taxes by any single taxpayer max out at $10 million or ten times the adjusted tax basis of stock issued by the stock
For just investments made between September 27 and December 31, 2010, the gains are also not subject to the Alternative Minimum Tax.

Other Important Things to Know:

It's confusing, but Qualified Small Business Stock (QSBS) taxes are actually based on ordinary income rather than what we normally think of as capital gains taxes. So, when you see that QSBS provides a 100% exemption of taxes on gains, the comparison is to the current 75% exemption on gains - which works out to 7% rate on ordinary income.

For any of you or your accountants looking for the actual language to the bill, we link you to the Small Business Jobs Act of 2010 here. The relevant sections are 2011-2013 (pages 51-53).

Here are a few of the articles and backgrounders we liked on the subject:

Wall Street Journal - For New Tax Breaks, Act Fast , September 30, 2010
Calling All Angels - Donald Jay Korn, Financial Planning Magazine, September, 2009 (This was written when the exemptions for QSBS were only 50 to 75%, but has helpful information, and includes one of the last media quotes from Luis Villalobos.)
Favorable Legislation Relating to Qualified Small Business Stock, Latham & Watkins, September 27, 2010
Overall summary of other items in the Small Business Jobs Acts

Several of the members of the advisory council of attorneys and accountants who advise ACA's Public Policy Committee are working on client alerts. As we have those, we will post them on our Web site and otherwise get the information to you.

Best wishes,

Marianne Hudson
Executive Director
Angel Capital Association

How Does Your Startup Business' Management Team Measure Up?

Thu, 30 Sep 2010 23:42:00 GMT

On Wednesday, September 29th, at an event sponsored by the Phoenix Chapter of the Thunderbird Alumni Network entitled “The Capital Process,” the formation of the Thunderbird Angel Network was announced to an enthusiastic group of Phoenix area Thunderbird alumni and other interested professionals.

As he announced the group's formation, Dee Harris, President of the Thunderbird Angel Network and long-time Angel investor, spoke to the group about the importance of having a solid management team.

“I have seen, time and again, management teams that have three people – all with the same skill set, that’s not what an investor wants to see.”

Fellow investor panelists Brian Burns of Grayhawk Capital www.grayhawkcapital.us, a venture capital firm, and Rick Deavila of Alerion Capital, a private equity firm, both echoed Dee’s position and expressed the importance of having a solid management team regardless of what level of capital a business is seeking. DeAvila said that the management team is often the most important feature of a company an investor looks at when evaluating a deal.

“Build Your Management Team,” a recent article by Steven Robbins in Entrepreneur Magazine, endorses the panelists position. The article emphasizes the need to build a senior team that's able to manage all the critical areas of your business to take it to the next level. Building your team demands matching jobs to people's strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality. The article covers the topic in great detaill, and is well worth the read.

If you are the founder, keep in mind that this advice applies to you as well. Don't give yourself an impressive title and job unless you're truly the right person for the job. The fact is, many smart entrepreneurs hire their own boss when they realize their skills lie elsewhere in the company.

KEY MESSAGE: Giving the proper weight to the importance of selecting a management team based on necessary strengths, and allocating critical roles in the business based on skills experience is perhaps the most critical facet of a business plan, but is often underplayed or overlooked. You can have the best new product or service idea , but if you lack a solid management team to execute upon it the idea has less value.

The Thunderbird Angel Network would like to thank all those who attended this event, and offers a special thanks to Brian Burt of Snell & Wilmer www.swlaw.com, who skillfully moderated the panel.

Turbo 140: Example Of A Great Thunderbird Business Startup Idea

Wed, 29 Sep 2010 20:30:00 GMT

All Jonathan Hegranes needed was a launching pad for his business idea. The Thunderbird MBA student had spent more than 200 hours developing a concept, writing a business plan and recruiting a team to support him. His opportunity came when the Thunderbird Entrepreneurship Network announced the Thunderbird Global Business Plan Competition, with cash startup awards for the winner’s business.

Hegranes’ idea was Turbo 140, a micro-job marketplace that will match people offering small jobs, or “gigs,” with people willing to do the tasks for negotiated fees. What will set the site apart is that all gigs, such as taking down Christmas lights, painting a fence or moving a fridge, will have to be posted in 140 characters or less.
“If Craigslist and Ebay had a super baby, it would be Turbo140,” Hegranes said. “You can outsource your to-do list in140 characters or less.” The name references the abbreviated nature of a 140-character Twitter post combined with a fast, efficient work request. Once a gig is posted, other users can bid their price to take the gig. Job posters and bidders will be able to sort and categorize gig types by region and job type. In addition, they will be able to allow their gig requests to be posted to their Facebook and Twitter accounts.

“This competition was the perfect forum to flesh out our ideas,” Hegranes said. “To go through the business process step-by- step, and to get the idea in front of profes- sionals.” Hegranes has worked with a team of two other individuals since January to build a business model and design a user-friendly, scalable site which is scheduled to launch in May.

“There are a lot of potential users, including businesses and individuals, especially students, who would take advantage of this kind of service,” he said. “We are going to do a big push on the university front beginning this August and hopefully spread beyond the Southwest soon after.”

Hegranes made it through several rounds of competition and business plan projec- tions before being chosen to be in the top five. He, along with the other four teams, had 10 minutes to present their plan before taking 15 minutes of intense questions from the six judges, who were professionals from a variety of backgrounds in Phoenix. “It was good to have some brutal feedback,” Hegranes said. “Brutal, but constructive.”
“Opportunities like this at Thunderbird can help develop ideas, they can help incubate them and fund them,” he said. The culture at Thunderbird is becoming more entrepre- neurial, and a lot of the students are already enterprising and creative. This is a great platform to move the school forward.”

Turbo140 is live and people can sign up to be part of the private beta at www.turbo140.com.

Make It Short, Fast & Direct (If You Want Angel Investors' Attention)

Fri, 10 Sep 2010 00:02:00 GMT

We live, work and compete in markets and economies where you must be more like a laser than a lava lamp, more like a gazelle than an elephant…and in today's complex and competitive business environment, three critical factors form a mantra for success: "make it short, fast and direct"!

Our customers, employees, and stakeholders are busy, very busy. So are angel investors and venture capital providers. Our world is peppered with message blasts, pop ups and sound bites…our ears, eyes and brains are fed with succinct, yet focused messages and images…and to get our story told, to get our message through, we need to adhere to the "KISS" principle, ("keep it simple, stupid").

Most startup entrepreneurs are familiar with the need for a well-crafted, honed "elevator speech" but it can also have great application to executives and employees in large organizations, professionals like doctors, lawyers and accountants or to individuals looking for that ideal job or career opportunity.

The elevator speech is featured in a scene where we find an intrepid entrepreneur, with a great idea, a great market opportunity but needing critical outside investment…low and behold, the entrepreneur finds him/herself walking into an elevator, with only one passenger—THE prime investor who the entrepreneur has been trying to connect with for months. As the elevator doors close, the entrepreneur knows there will be undivided attention to his/her story…so what does the entrepreneur say during the 20 or so seconds of a 25-floor elevator ride?

We can apply the principles of an elevator speech to most any situation where we must "tell our story" in a few brief moments…it may be at a networking event, a cocktail party or during the first critical 20 seconds of a phone call to a prospective client, employer or constituent. The "story" should basically tell 1) what you do, produce, or provide, 2) who is it for (the market niche you serve) and importantly, 3) how are you different?

We also need to make our messages direct, and this is where we've got to be more like a laser…there is a world of clutter and noise, and we can't afford to fritter away marketing costs…shotgun or scattered approaches are inefficient, costly and unproductive. We must finely tune our marketing strategy, to find overlooked niches (e.g., travel agents focusing on travel services for seniors) or pick off underserved segments (e.g., audio books, underserved by large chain booksellers). By being direct, we also focus on serving well, fewer, but more productive and profitable, customers…we emphasize "share of customer" vs. "share of market."

There are few businesses, practices or organizations that would not find some kind of benefit by using the web as a means to reach, more directly, their target markets. The web provides an uncommon method of developing a relationship with your market, in a dynamic, direct and highly productive way. When we develop a community of customers or constituents, we have a highly efficient, low cost way to communicate, and foster long term, productive and profitable relationships.

We have great opportunity to advance our company, our practice, organization or career, if we simply focus, perform, and…keep it short, fast and direct

By Steven Stralser Ph.D. Clinical Professor, Global Entrepreneurship Center