Jean Peters' testimony before Congress last weekBy http://profile.typepad.com/1237764140s22740 // April 19, 2013 in Angels
Just this week catching up to the testimony Jean Peters, managing director of Golden Seeds Angels and a board member of the Angel Capital Association (and, incidentally, moderator of yesterday's accredited crowdfunding panel at the ACA Summit), gave last week before Representative Dave Schweikert's Small Business Subcommittee on Investigations, Oversight and Regulations.
Peters' prepared remarks are both an excellent summary of how angel investing catalyzes entrepreneurial and startup activity, and how organized angel investing, through angel groups, can help the country manage the transition to newer rules around the means of private financing.
I'm going to quote liberally below from Peters' prepared remarks. Here also is a link to an archive of the committee hearing webcast.
"Startup investing is a disciplined and long-term process. Angels bring careful due diligence, negotiations and experience to the table.
"We have to: angel capital comes from our own pockets. We are not investing other peoples’ money. We invest our own, and more often than not use our successes to fund the next round of startups.
"We understand that what we do is highly risky and extremely illiquid. Angels give time and expertise, without compensation, and often without liquidity for 8 to 10 years. We do this to make a return – but also to give back, to keep up with our industry -- and because start-ups value what we do. As a result of the thoughtful work of angel groups, the strong growth in angel financing over the past decade has remained virtually free of fraud or abuse."
. . .
"Angels have a long history of adhering to disciplined due diligence, deal screening, term sheets and corporate governance. As more accredited investors come into this class, ACA will play an expanding role in helping high-growth startups and investors intelligently and successfully come together.
"ACA will continue to provide adult supervision in this shifting landscape of social media, general solicitation, and the nascent conduit of crowdfunding.
"We will be there when companies that are crowd-funded need additional capital.
"We will continue to be the primary sorting mechanism for those startups that are most promising.
"We will help ensure that companies seeking funding are legitimate, appropriately structured, managed and valued.
"Angel groups can provide a substantial barrier to the types of hazards that might face accredited investors – and others trying to sift through advertising or crowdfunding to identify great entrepreneurs and startups.
"And that will mean that the innovation now bubbling up in every congressional district and jobseeking community will stand a far better chance of success for the entrepreneur, for its employees, and for the investor willing to take that risk."