INDIANAPOLIS, Ind., December 16, 2014 – – Call it the “Good Housekeeping Seal” for angel investing groups and a way for entrepreneurs to more easily address securities regulations.
VisionTech Angels, the angel-investing arm of VisionTech Partners, is now one of five angel investing groups in the nation and the first in Indiana to become certified as an Established Angel Group (EAG) by the Angel Capital Association (ACA), the leading professional and trade association supporting the success of angel investors in high-growth, early-stage ventures. EAG certification indicates to entrepreneurs that the organization has taken reasonable steps to verify that angels in the group are accredited investors, reducing the burden for entrepreneurs who general solicit their investment opportunities to verify their investors are accredited.
The EAG certification program was developed to address new rules from the Securities and Exchange Commission (SEC) that allow entrepreneurs to generally submit or advertise their investment offerings as long as they take reasonable steps to verify that their investors are accredited investors. An individual accredited investor must have a net worth of at least $1 million (not including primary residence) or an annual income of at least $200,000. The EAG certification addresses detailed requirements of the SEC rules; many attorneys have endorsed the new certification as a reasonable verification process in generally solicited offerings, rather than requiring investors to provide financial documentation to issuers or third party verifiers.
ACA Executive Director Marianne Hudson said, “The ACA is pleased to count VisionTech Angels as a certified Established Angel Group and one of the first in the country. This certification should make the investment progress easier for VisionTech Angels members and entrepreneurs by removing verification concerns around generally solicited deals, leading to the growth of more innovative startup companies and jobs.”
VisionTech Angels met a number of stringent criteria to earn certification as an ACA Established Angel Group. The Indy-based angel group had to prove its purpose is to invest in early-stage companies, that its members are accredited investors, are aware of the risks associated with investing in early-stage companies and are thoroughly vetted before becoming members; that the group adheres to an established code of conduct and has a formal deal/investment process, and has a process for members to affirm accredited investor status no less than annually.
The ACA recommends that ACA Established Angel Groups offer regular education sessions for members about early stage investing. VisionTech Angels has a robust educational program with the IU Kelley School of Business, which not only educates members, but also conducts active community outreach to universities, business groups, and entrepreneurs interested in learning more about angel investing.
VisionTech Partners Managing Director Oscar Moralez says that the number of angel investing groups in North America has exploded in the last decade, fueled in part by the popular reality show Shark Tank, which highlights the “sexy” side of startup companies. Universities, state and federal governments, economic development experts, entrepreneurs, and corporate America have elevated their interest in and involvement with angel groups as a way to increase access to capital and support company formation and job creation. Experts believe that entrepreneurs will increasingly take advantage if the new general solicitation rules to raise angel capital.
“The interest in angel investing is high,” agreed Moralez. “There is a realization that entrepreneurs and small companies drive economic growth—look at Facebook, Angie’s List and ZocDoc for example—but they need money to get their ideas off the ground. Angel investors are often one of the few sources of early stage capital so it’s only natural that people want to connect with angels,” Moralez said.
Which is why, added VisionTech Partners Managing Partner Don Scifres, it was important for VisionTech Angels to have ACA certification as an Established Angel Group. “We want VisionTech Angels to set the standards for building successful companies, and that includes engaging qualified investors, deal flow, due diligence, investor and startup education, and collaboration with universities, the business community and other investment groups. Operating at this higher level, with the ACA’s resources behind us, allows VisionTech Angels to be our best and also the first angel group people call.”
Being an ACA Established Angel Group demonstrates that VisionTech Angels adheres to best practices, education and professionalism in angel investing, while offering its investors and portfolio companies the opportunity to network and collaborate with investors who belong to other ACA member angel groups. Angel investing is considered a “high risk, high reward” activity and requires participants to be accredited investors under SEC guidelines.
VisionTech Angels has five Indiana chapters that meet on a bi-monthly basis to review investment opportunities, the majority of which are early stage or early growth companies headquartered in Indiana. These chapters are located in Bloomington, Indianapolis, Lafayette, Warsaw, and a virtual group that supports investors who wish to participate on-line.
Other ACA Established Angel Groups are Sierra Angels in Nevada, Hyde Park Angels, Chicago; Cherrystone Angel Group, Providence, R.I.; and Alliance of Angels, Seattle.