Hanah Cho of Dallas Morning News interviews Jim Lafferty

Angel Capital Association says new SEC rules could hinder angel investment
By Hanah Cho
hcho@dallasnews.com
11:48 am on July 17, 2013

Last week, federal securities regulators lifted a ban on advertising by startups and companies seeking to raise capital, a decision hailed by supporters who believe the move will make it easier for entrepreneurs to find investors.

The Securities and Exchange Commission approved the change that was part of the Jumpstart Our Business Startups (JOBS) Act, which was passed by Congress in 2012.

The Angel Capital Association, a trade group that represents networks of angel investors, however, is raising concerns about the new rule’s impact.

SEC’s new rule says startups can advertise their investment opportunities as long as they take steps to verify the investors are accredited. Accredited investors are generally wealthy individuals, whose net worth generally exceeds $1 million or annual income exceeds $200,000 in each of the two most recent years.

SEC guidelines call for startups to review copies of an investor’s IRS forms for income verification or get written confirmation from a registered broker-dealer or investment advisor.

Those steps pose a problem because the new rule eliminates the ability of angel investors to self-certify their status, according to the ACA. As a result, many angel investors will stop investing, the group predicts.

Asking investors to provide personal financial information to a startup or entrepreneur is akin to a bank demanding to know your net worth before you could open a bank account, said Marianne Hudson, ACA’s executive director. It is also a violation of privacy, she said.

Dallas angel investor Jim Lafferty agreed.

“Today, every time any of us makes a private investment, we sign a document that indicates that we meet the SEC’s definition of an accredited investor,” said Lafferty, chairman of the board of the North Texas Angel Network, an ACA member. “We take on the liability associated with saying that we’re an accredited investor. If we’re not, it’s our problem, not the entrepreneur’s problem.”

Lafferty said angel investors would be weary to provide personal financial information to entrepreneurs.

“Angel investing is a private investment with a private company,” said Lafferty, who runs Lewisville-based Genesis BioSystems, a medical device manufacturer. “Investors will have concerns over privacy and disclosure and where the data goes. Will it end up in the hands of the IRS or the SEC? It will immediately have a major impact on private investment.”

The new rule becomes effective 60 days after publication in the Federal Register.

Separately, the SEC is still considering rules for so-called crowdfunding, which is intended to open up equity investment opportunities to the general public as part of the JOBS Act.

Source: www.fundable.com

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Member Larry Blackledge leads company to a $7MM round of strategic investment

LG Electronics Selects Active-Semi’s Power Technology Resulting in Strategic Investment

Power Application ControllerTM (PAC) Platform and Active Direct DriveTM LED Driver Semiconductor Solutions Provide Unprecedented Energy Savings and Cost Reductions

DALLAS–(BUSINESS WIRE)–

Active-Semi www.active-semi.com, the leader in flexible, highly integrated semiconductor power management solutions, today announced that LG Electronics Inc. is the major new investor in a round of strategic funding that will accelerate the development of power semiconductor solutions ideally suited for LG Electronics’ diverse lines of industry-leading electronic products.

 “Active-Semi’s power solutions with firmware meet LG Electronics’ stringent next-generation electronic system space and cost requirements,” said Dr. Sam Ha, Head of Energy Components Business, LG Electronics. “Our investment and joint collaboration with Active-Semi will enable fast and broad implementation of this flexible power application controller platform that scales across numerous product lines such as our smart home appliances and air conditioning systems.”

 LG Electronics will initially target Active-Semi’s Power Application Controller (PAC)™ platform to enable rapid worldwide conversion to energy efficient home appliances, then expand to other applications that can leverage the benefits of the platform.

LG Electronics joined Active-Semi’s existing investors including U.S. Venture Partners, Tenaya Capital and others in this $7 million round of financing.

“We are delighted about LG Electronics’ strategic investment in Active-Semi,” said Winston Fu, Chairman of Active-Semi and a general partner at U.S. Venture Partners. “We value them as a significant customer for Active-Semi’s technology and as a key member of the company’s investment team.”

 “LG Electronics is a long-time valued customer of our mobile charging solutions,” said Larry Blackledge, CEO, at Active-Semi. “This new investment further validates our approach to developing the world’s most energy efficient and flexible Power Application ControllerTM (PAC) platform. Active-Semi continues to sustain rapid acquisition of key customers who value the comprehensive power management functionality offered in our PAC platform as well as our LED lighting and mobile charging solutions, but at the lowest total cost of ownership.”

About Active-Semi www.active-semi.com

Founded in 2004 and headquartered in Dallas, Texas, Active-Semi is the leader in flexible, highly integrated semiconductor power management solutions for digital control of analog power. The company has shipped more than one billion modular power management ICs which energize today’s consumer electronics and industrial designs by simplifying design, boosting equipment performance and enabling intelligent battery charging. With analog and mixed-signal semiconductor experts located in ISO9001:2008 certified R&D centers and sales facilities in the United States, China, Hong Kong, Japan, Korea and Taiwan.

About LG Electronics Inc.

 LG Electronics, Inc. is a global leader and technology innovator in consumer electronics, mobile communications and home appliances. With 113 operations around the world, LG achieved global sales of KRW 51 trillion (USD 45 billion) in 2012. LG is comprised of four business units – Home Entertainment, Mobile Communications, Home Appliance, and Air Conditioning & Energy Solutions – and is one of the world’s leading producers of flat panel TVs, mobile devices, air conditioners, washing machines and refrigerators.

About U.S. Venture Partners

USVP is a leading venture capital partnership, helping entrepreneurs transform their ideas and efforts into world-changing companies. USVP focuses on early-stage ventures in information technology and health care.

Contact:

North America and Asia Media Contact
Kaye Public Relations
Lynda Kaye, 250-266-5293
lynda@kayepr.com
mobile: 650-799-2888
or
Europe Media Contact
Wired Island
Mike Sottak, +33 (0)6 0115 7068
mike@wiredislandpr.com

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Savara Pharmaceuticals uses CTAN & NTAN to set $16MM funding trend

 

This is the first of a two-part series on the evolution of angel investing. To read part two, click here.

Savara Pharmaceuticals needed several million dollars to take its inhalable drug for troublesome infections in cystic fibrosis patients through Phase 2 clinical trials. So CEO Rob Neville, naturally, began talking with venture capitalists. But in the end, he didn’t end up needing any of their money.

Over the course of about a year, Savara raised a $16 million Series B round – in two tranches – led by a quartet of angel groups from central Texas to southern California.

It’s a case study on the burgeoning influence of angel investing networks, which are moving across state lines and outside of their own networks to piece together bigger deals. They’re also enabling angel investors to move upstream and fill funding gaps opened by more risk-averse and tapped out life science venture funds.

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“(Our) story had resonated well with first groups that we raised money with, and we found that we had traction and momentum in the angel groups,” Neville said. “It wasn’t a decision from the outset to go one way or the other; that was just the path where we had the most success.”

Neville said he first recognized that the company had traction among angel groups when it raised a $1.4 million Series A round from members of the Central Texas Angel Network in 2009. Although he talked to venture capitalists when it came time for the Series B, he said his team also went through a disciplined approach of identifying angel groups, looking at which ones were active in the industry, and prioritizing them. Then he began presenting to groups – a process much more complex and tedious than it sounds.

“Once you’ve gotten through the screening, you get to present in one chapter. Then, if you get traction, you get to present to another chapter,” Neville said. “Then they do due diligence, which usually takes about two months. Then you go back to those same people and say, ’remember us?’ and present again.”

To get to the scale of a $16 million round, Neville said he talked to somewhere around 15 networks. In the end it worked out for Savara: About half of the 220 investors who joined the Series B were individuals outside of the life science industry who likely would not have looked at the deal if they weren’t connected to the network.

Angel groups are enabling networking on a larger scale, too. Sergio Gurrieri, who owns a life science business consulting firm and invests in startups through Tech Coast Angels, said the group reaches out to other networks when they feel they have a strong company on their hands. Tech Coast Angels joined investors from the Keiretsu Forum, Central Texas Angel Network and North Texas Angel Network in Savara’s Series B.

Neville had high praises for all of the investing groups he works with, but had one work of caution for entrepreneurs: “As much as this is a process that is footing the gap for the venture firms, this is by no means a simple process,” he said.

In fact, that commitment of time and effort is one thing that’s kept other life science startups from pursuing a similar path.

To get the investor perspective on the trend, click here.

[Photo credit: Flickr user AdamSelwood]
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NTAN Member, Larry Kanter featured in D Magazine

Photo of Larry Kanter

photography by Joshua Martin

Why You Need to Know Him:
Because Kanter is not your average numbers cruncher. He has expertise in accounting, law, and business operations, and uses their overlap— forensic accounting—to help settle complicated business disputes…

Read the full article in D Magazine.

 

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WFAA Profile on the North Texas Angel Network

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Rob, Woody and T-System in Dallas Business Journal

View the recent article in Dallas Business Journal regarding Dr. Robert Langdon and Dr. Woodrow Gandy, co-founders of T-System here.

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Alliance of Texas Angel Networks Website Unveiled

The newly formed Alliance of Texas Angel Networks has unveiled a new website: http://www.allianceoftexasangelnetworks.com.  The new site provides a centralized listing and information about alliance angel groups.

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Angel Capital Association Appoints Jamie Rhodes to Board

North American alliance of angel groups expands board from nine to eleven members

Kansas City, MO, — The Angel Capital Association (ACA), the trade association of leading angel investment groups in North America, has elected five new directors, expanding its Board of Directors from nine to eleven members. The organization also elected officers for the 2010-2011 term.

“The Angel Capital Association will greatly benefit from the experience, enthusiasm, and expertise of these five new board members who represent leading angel groups from across the country,” said Marianne Hudson, executive director of ACA, an organization that was established by angel groups to build professionalism of angel investors. “Growing the board from nine to eleven directors allows ACA to increase our national leadership and industry presence and participation.” Continue reading

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Texas Angel Investors to Form Alliance

By SHERYL JEAN / The Dallas Morning News sjean@dallasnews.com
Published 03 October 2010 10:23 AM

Angel investor groups across Texas are forming an alliance to attract more investors, make larger joint investments in young companies and simplify the process for entrepreneurs.

“Our goal is to make it easier for entrepreneurs to get their deal in front of multiple angel networks,” said Jamie Rhodes, chairman of the Central Texas Angel Network in Austin who is leading efforts to launch the alliance. “This is incredibly important, since angel investing is such a major part of the economy, which is in the doldrums. Start-ups create the vast majority of jobs in the nation.” Continue reading

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