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.

The results of the recent Spencer Trask Institute survey of nearly 2,000 accredited, high-net-worth  (HNW) Angel Investors (conducted after the U.S. Congress had enacted changes to the U.S. Federal Tax code, increasing marginal tax rates and changing the limits on capital gains), 75% of all respondents said they would either maintain their current Angel Investments levels (68%) or increase the level of Angel Investments they planned to make (7%) in the coming year.

A common fear during the public discussions and backdoor Congressional negotiations was that changes to the tax code to be enacted early in 2013 – a combination of increases in the marginal income tax rates affecting most HNW Angel Investors, as well as increases in the tax on capital gains, dividends, and interest income – would   be absorbed by HNW investors through a reduction in the amounts of capital they allocated to high risk/high reward, early-stage opportunities.  Most financial analysts consider this category of investment to be ‘discretionary’, representing only a small (3%-5%) portion of HNW portfolios, and therefore one of the first to be eliminated if Congress moved to increase taxes on any forms of disposable or investment income. 

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

Simulation 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

The 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?

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

As 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?

Opportunities 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

REID 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

A 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 

As 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.

Where 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.