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Angel Insights Blog
For Private Equity Investors, Section 1202 May Be Worth Another Look
By: Daniel N. Zucker and Jeffrey C. Wagner of McDermott Will & Emery
This blog post originally appeared in Venture Experts
Included in the American Taxpayer Relief Act of 2012 (ATRA) are provisions that extended some of the more significant benefits of Internal Revenue Code Section 1202, the Code provision that permits eligible noncorporate taxpayers to exclude from taxable income (within limits) a specified percentage of any gain from the sale or exchange of "qualified small business stock" (QSBS) held for more than five years. That percentage, which, when Section 1202 was first enacted in 1993, was 50 percent of the recognized gain from the sale of the QSBS, was increased to 100 percent of such gain for QSBS acquired after September 27, 2010, and before December 31, 2010. The 100 percent exclusion was extended through December 31, 2011, pursuant to the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. ATRA retroactively extended the 100 percent exclusion for QSBS acquired in 2012 and 2013. More importantly (to some), ATRA also extended the rule that excluded that gain not only for regular income tax purposes but for alternative minimum tax (AMT) purposes as well.
Where are All the General Solicitation Deals?
By: Robert Fisher, CEO of Fisher Tanner Associates. He is a member of Ohio Tech Angels, X-Squared Angels, and the Angel Capital Association.
With speed approaching perilously close to that of light itself, recent deregulation has freed huge and heretofore inaccessible pools of private monies to fund new investment and unshackle innovation.
Just kidding – that didn't happen. Would have been nice, eh? One could argue it wasn't for lack of good legislative intention. As part of the JOBS act – Congress did indeed instruct the SEC to remove the ancient prohibition against General Solicitation and Advertising under Regulation D. The concept: make it easier for start-ups to cast a wide net when seeking investors. You may recall good ol' Reg D which provides exemptions from SEC registration. The Reg D exemption relied on by most private investors – now called 506(b) continues the solicitation ban. The new exemption since last September – 506(c) – eliminates the ban but not without a new gotcha of its own.
Startup Day Across America – Opportunity for Angels and Startups to Engage Your Members of Congress
By: Marianne Hudson, ACA Executive Director
In recognition of the importance of innovative startups, several Congressmen and Senators have established Startup Day Across America, as a way to celebrate and meet with startup companies while they are in their home states and districts. This is a great time for ACA members to contact their Congressmen and suggest they visit a portfolio company or attend an angel roundtable. The official day is August 5th, but any day in August will work.
More and more Congressmen and Senators understand the importance of innovative startups to America's economy, and some are also noting how angel investors support these job creators. I believe it is important to grow that understanding in our legislators and encourage ACA members to reach out to your US Representatives and Senators to meet with you and your portfolio companies during their August recess – many of them really enjoy talking with their constituent entrepreneurs and investors! Such a meeting can also bring local media attention to your angel group and portfolio companies, if you choose to promote it.
Tags: Protect Angel Funding
Internship at a Healthcare Angel Group - Learning from Within to Succeed in Healthcare Entrepreneurship
By: Eric Liu, PHD/MD student at the University of Oxford
Editor's Note: Eric Liu is a DPhil student in Medical Oncology at the University of Oxford. Last year he served an internship at ACA member Life Science Angels, where he had a front seat in medical entrepreneurship and also provided valuable work for the angel group. Since his angel internship he has taken an internship with the Head of Global Strategy and Regulation of Bayer Healthcare. He highly recommends internships for young healthcare entrepreneurs, as you can see from his enthusiastic story.
Entrepreneurs that successfully utilize innovations shape much of our society today, making our lives a better place in an ever more challenging environment. With an aging population and skyrocketing healthcare bills globally, many healthcare entrepreneurs are using their brilliant minds to help address some of the most unmet medical needs.
Michael Cope's Letter to the SEC – Example for Others
By: Michael Cope, Founder of Cope Ventures
Editor's note: Michael Cope is a Dallas-based angel investor, mentor, and serial entrepreneur. He recently shared with ACA his letter to the SEC on potential changes to the accredited investor definition. He has compelling thoughts, and wanted others in the startup ecosystem to consider it as an example of letters they could write on this important topic.
The Honorable Mary Jo White, Chairman
100 F St. NE
RE: Accredited Investor Definition
Dear Chairman White:
I am an independent Angel Investor and have been so for nearly 20 years, with multiple good exits under my belt. I earned the money that I invest by founding a business in 1974, operating it for 20 years including taking it public as a NASDAQ company in 1984. Since "retiring" in 1994 I have been involved in numerous early stage companies and helped many start ups get off the ground and on to success. I think I can be viewed as someone that the SEC, and the country in general, WANTS to see as an active Angel investor. Since my net worth is well above any threshold the SEC might set as a minimum to qualify as an Accredited Investor, I am not writing to protect myself, but rather to protect my numerous colleagues who are qualified based on their skill sets to judge the risks in early stage investments, and who have amassed more than $1M in net assets (not counting residential holdings) but may not have the $2.5M mark yet.
ACA Members
Accredited Investor
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Innovation in Angel Investing Structures by Kevin and Denise Ld on November 04
Scorecard Valuation Methodology (Rev 2019): Establishing the Valuation of Pre-revenue, Start-up Companies by Bill Payne on October 21
ACA Submits Important Letter to the SEC to Improve Angel Investing Rules by mhudson on October 07
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