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Spencer Trask Blog

 



Angel Investing – More than Just Making Money

Today’s Angels Want to Bring More than $$ to the Game

angel-upIn a recent survey of nearly 2,000 accredited, high net-worth Angel investors conducted by the Spencer Trask Institute, today’s Angel investor expects to bring more than just capital to the table when funding start-ups. In fact, in many cases the cash investment is akin to a poker game ante – it’s the price you pay to get in the game and stay there as the game plays out. This is an important aspect of the Angel investing game that both the Angel community as well as the entrepreneurs seeking investment capital would be wise to understand.

Today’s Angels, particularly those who invest as standalone individuals, are looking for something more than just absolute financial returns from their investments. According to our survey results, the economic return on their invested capital was only the fourth most important aspect of their investment decision and, while no Angel wants to lose money on any deal, their investment decisions are motivated by several other factors relating to their personal goals, their emotional/psychological needs, and a host of other non-financial criteria. Let’s look closer at these other motivating factors.

 

Thank You, Angelina

Protect Patents to Save Lives

ajolie1As most of you are probably aware, the recent disclosure that famed actress and philanthropist, Angelina Jolie, has taken the bold and courageous step of having a double mastectomy after diagnostic testing revealed that she had an 87% chance of contracting breast cancer. Her public revelation arrived with uncanny timing – the scientific testing methodology which yielded this dramatic revelation is known as the BRAC Analysis – a genetic test which tells doctors about a patients' likelihood of developing breast (and ovarian) cancer. After many years of research and $500M in investment, this breakthrough test was developed and patented by Myriad Genetics, Inc., a company whose founders include the Chairman of Spencer Trask & Co.

 

Angel Investors Plan to Stay in the Game

Tax Changes Won’t Alter Angel Investment Strategy

Contrary to the conventional wisdom, the wide-ranging new tax increases recently enacted by Congress may not have the dampening effect on private equity investments that many believed.  In fact, it may be a ‘mini stimulus’ as some individuals with an appetite for Angel and early stage investments actually intend to increase rather than decrease their investments in early stage companies.

 

Discovery of the Year: Higgs Boson - Powered by a Network.

cand-higgs-2012Simulation of the Higgs from one of two detectors at CERN

Science Magazine recently declared the Higgs boson discovery the "Discovery of the Year" and it rightfully deserves the title. Director general of CERN, Rolf-Dieter Heuer said, "I think we have it." By ‘it’ he meant the Higgs boson - Mother Nature’s missing child.

Everything exists thanks to the Higgs field, so figuring this out is a big deal. “It is the most important scientific discovery of the 21st Century,” exclaimed Ainisa Ramirez of Yale University.

 

Power to the People

Power to the PeopleThe uncertainty of the Affordable Care Act has lifted. In all-American fashion, its key objectives--largely being driven by entrepreneurs--have already begun to reboot the system with free market and innovation.  Let’s look at some examples.

For structure, we hark back to the studies that first catalyzed this turmoil: Dr. Jack Wennberg's research at Dartmouth University. His work can be boiled down to three principles:

 

Do Good or Do Well? – Why Not Do Both?

Impact Investing

Another year has come and gone and for many ‘well off’ Americans, it was another season of ritualistic year-end tax planning.  Decisions abound: to take some gains to offset some losses or not; to move to tax free instruments or stick with “taxables”; to change the portfolio allocation percentages or stay the course; to increase investments in more speculative, high risk/return equities or keep ‘powder dry’ even though it yields negative returns on cash; and the inevitable choices related to philanthropic and charitable giving.

 

Jobs (the lack of) + Jobs (Steven P.) = The Resurgence of Entrepreneurism in America

EdisonAs has been the case over time, changes in the nature of our economic institutions typically require cataclysmic events to alter the conventional wisdom, the rate of change and the most basic aspirations and expectations of the workforce – particularly amongst the younger population entering the workforce from academia. The U.S. has always been considered the world’s leading innovation/entrepreneurial factory.

 

Have We Seen The Last New Social Network?

social networksOpportunities for social networks in business, consumer markets, and non-profit arenas are prevalent.  They not only revolve around providing the infrastructure and technology which enables the creation of focused communities with common interests, but also provide a shared experience where people can exchange information, interact, strengthen and expand existing relationships, and foster new one with like-minded individuals for a greater purpose. By doing so, users find themselves engaged and satisfied.

 

Angel Investing for Everyman

R.HoffmanREID HOFFMAN, chairman and co-founder of LinkedIn Corp. Bloomberg News

Investors in very early stage companies, known as Angels, have been glamorized and idolized by everyone from Hollywood to the blogosphere. They have become the new American Dream – modest wealth turned into fame and fortune by a single smart investment. Think Groupon, Facebook, Pandora, Twitter and LinkedIn — Angels invested a relatively modest sum of, let’s say, $500,000 only to watch it grow zeros in front of the decimal point.

 

An Incubator for the World

jamaica-bay-a-wild-place-on-the-edge-of-changeA kayaker in Jamaica Bay | NY TimesIt is said there is a place in New York City where “nature is so dominant that it makes the city a backdrop.”  That place is Jamaica Bay and its plight was featured on the front page of Friday’s Metropolitan section in the NY Times, “Jamaica Bay: Wilderness on the Edge.

 

 

Tax Incentives (Startups + Angels) = Job Creation 

eventAs part of the Boston Region Entrepreneurship Week (BREW), Spencer Trask will be hosting a panel discussion on Friday, October 15 entitled: “Building a New Framework for Economic Sustainability through Entrepreneurship and Innovation.” The event’s focus will be on the critical roles job creation and community development play in stimulating the economy, at the local and national level. 

   

How Do We Stimulate Job Growth?  Startups

By William Clifford, CEO, Spencer Trask & Co.

firm_formation_importance_of_startupsWhere does the responsibility lie in finding, financing and growing startups? Historically, that role was the domain of Venture Capital firms scouring the countryside, analyzing business plans, and committing the seed-level investment capital needed to launch a new venture.

   

Intellectual Diversity in an Open World

bill_cliffordYesterday Spencer Trask’s CEO Bill Clifford participated in a panel discussion on “Intellectual Diversity in an Open World” at The Economist’s Ideas Economy: Human Potential in New York.  This has not only been a subject of intense focus at Spencer Trask, but has come to heavily influence our business model as well.  In a summary below, Bill provides an overview of his conference comments and the future of Spencer Trask.

   

Harnessing the 'Cognitive Surplus' to Drive Value Creation

1 TRILLION hours each year. That’s the amount of free brain time Clay Shirky, author of ‘Cognitive Surplus’, says is available annually within the world’s educated population.  Our challenge lies in understanding how to leverage the connected world and draw upon our natural human instincts to create and share – to do something vs. doing nothing.

   

The Other Side of the Cloud 

The Rise in Cloud-Computing and its Environmental and Economic Impact

Named by Gartner as the “Top Tech Trend for 2010,” cloud-computing has become an industry juggernaut. Already a $16.48 billion market, money is projected to continue pouring in at an annual rate of 27% over the next four years. And as theWall Street Journal reported earlier this week, the number of servers deployed in cloud applications is expected to triple to 1.35 million within the same time period.

   

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