Angel investor

3 Important Ideas on How to Attract Angel Investors

by Fred Abramson on January 7, 2011

Angel Investing is expected to pick up in 2011. In the past, tapping a home equity line of credit was a critical way for entrepreneurs to fund their business. But since that avenue for for borrowing has dried up, entrepreneurs have had to look for alternative ways to fund their business. Todd Taskey, writing in Small Businesses Trends takes a “look behind the curtain” to see how one very successful angel investment group tracks and considers its investments.  He looks at 3 factors- 1) Pre Money Valuation, 2) Liquidation Preference and 3) Market Perspective.

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Nurturing Start-Ups is the Path to Creating New Jobs

by Fred Abramson on September 13, 2010 · 2 comments

Two-thirds of net new jobs are created by small businesses.  However, the National Bureau of Economic Research found that once the age of a business is taken into consideration, there is no systematic relationship between firm size and growth.

According to the New York Times, nearly all job growth occurs when businesses are starting up. When businesses mature,  job expansion essentially stops.

Our unemployment rate is at 9.6%. Any serious solutions for creating new must focus on how to create new start-ups and nurture new firms that are in their infancy.

Some argue that raising long-term capital gains, like the Obama administration is proposing, can hurt the prospects of start-ups.  Since angel investors calculate taxes when deciding how much to invest, they may decide to fund less start-ups.

On the other hand, most new businesses make  little or no income. Entrepreneurs focus on making it big, not on taxes. The  New York Times notes that when Microsoft started up, the top income tax rate was at 70%.

One cheap way of fostering start-ups is by granting more residence visas to skilled immigrants, especially those who attend American universities. On February 24, 2010 Senators Kerry and Luger proposed the Startup Act of 2010, which would permit immigrant entrepreneurs to stay or immigrate into the  United States if they have secured “significant” funds to start a new company. Since immigration is a sensitive issue and the mid-term elections are upon us, this bill seems unlikely to pass soon.

Start-ups are always in need of capital. Unfortunately, banks have tightened their lending to start-ups.  Since the private sector is unwilling to lend, the government may have to step in and start lending to start-ups.

Another possible solution is to provide funding for incubators. Currently, there is an excess capacity of commercial real estate. The government should provide tax breaks to landlords to provide below market leases to incubators. Incubators would be required to house no less than three different businesses and be in business for less than 3 years.

What to you think? Is funding incubators a good idea? What are your solutions for job growth?

Frederic R. Abramson is the principal of the Law Office of Frederic R. Abramson, which represents start-ups.

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Entrepreneurship and Social Change VC NYC panel March 4, 2010

by Fred Abramson on February 27, 2010

On July 4, we celebrate the entrepreneurs who were our founding fathers who made a difference by bringing social change to America. Unlike July 4, there is nothing particularly unique about the date of March 4.  On that date back in 2006 final contact was attempted with Pioneer 10 by the Deep Space Network. Unfortunately, no response was received.

NYConvergance recently noted that the New York Tech scene has matured. One sign of its maturity is the bevy of tech events in the New York City area.

What could be better than making March 4, 2010 special by spending the evening celebrating the power of entrepreneurs to change the world.  According to the press release:

The event will feature a panel that brings together the nation’s most prominent advocates for both early stage investment and social enterprise.  Fred Wilson, founder of Union Square Ventures, is an advocate for early stage investment and the single most read blogger in the venture capital community.  Jacqueline Novogratz is the founder of the Acumen Fund, a global nonprofit venture philanthropy fund that hat uses entrepreneurial approaches to solve the problems of global poverty.  They are joined by Roger Ehrenberg, founder of IA Venture Strategies and one of the most active angel investors in New York and Jacob Gray, partner at Murex Investments. The panel will be moderated by Scott Edward Anderson, founder of the greenskeptic.com and a frequent commentator on the FOx Business Netowrk. This rare combination of finance and philanthropy leadership reflects GoodCompany Ventures’ unique mission to help social entrepreneurs develop scalable, for-profit businesses to address unmet social needs.

Here are the details:

Date:   March 4, 2010

Time:  6-8 PM

Location:

Green Spaces NY
394 Broadway
5th Floor
New York, NY 10013

Cost: $35

For more information: GoodCompany Ventures

Drop me a line and let me know if you are planning to attend.  I would love to meet up with you!

The Law Office of Frederic R. Abramson is not affiliated with the above event.  If you have any questions regarding legal issues concerning entrepreneurship, contact the Law Office of Frederic R. Abramson at 212-233-0666.

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Startup Immigration Visa for Entrepreneurs announced by Senators Kerry & Lugar

by Fred Abramson on February 24, 2010 · 1 comment

Headshot of John Kerry with the U.S. flag in t...

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Senators Dick Luger and John Kerry introduced today a new piece of legislation entitled “The Startup Visa Act of 2010.” This visa would permit immigrant entrepreneurs to stay or immigrate into the  United States if they have secured “significant” funds to start a new company. The goal of the act is to bring new jobs, opportunity and investment to the US.

To make the visa available, a new EB-6 category would be created. This new visa category would draw from visas under the existing EB-5 category.

One potential sticking point for many budding entrepreneurs is the proposed legislation’s definition of “significant” funds. The bill requires investment capital available from a sponsoring US venture capital or angel investor of at least $100,000 in an equity financing of not less than $250,000. If after 2 years the immigrant entrepreneur can show that he or she has generated at least 5 full time jobs or attracted at least $1 million in additional capital or revenue, then he or she would achieve legal status.

Clearly, this bill is aimed at attracting startup immigrant all-stars. Perhaps the young entrepreneur from Russia who started Chatroulette would qualify.  It will also help young entrepreneurs with great ideas who have recently graduated from college who have  obtained venture funding.

Most immigrant entrepreneurs who contact my office have great ideas but only limited access to capital.   I field a few calls a week from potential immigrant entrepreneurs who have amazing business plans which would be inexpensive to implement, but would fall short of the capital requirements.  I am not sure Bill Gates would qualify for a visa under the Startup Visa Act of 2010 if he hailed from Bangalore when he started Microsoft.

Nevertheless, this proposed law is  a step in the right direction and I support the bill.

Full Text of Proposed Legislation of The Startup Visa Act

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