Matt Dunbar is managing director of the Upstate Carolina Angel Network.
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2014 is poised to be a historic year for angel investors
2013 was a momentous year in the world of entrepreneurship and venture capital – both nationally and locally. 2014 is poised to be even more historic.
Unlike most years when the top stories in the world of entrepreneurship and venture investing are exclusively about emerging technologies, the predominant theme at the moment stems from the most sweeping changes in the rules for raising capital since the Depression era.
Last fall, the SEC finally implemented rules from the 2012 JOBS Act that allow startups and private equity funds to publicly advertise that they are raising money for the first time in 80 years. Sometime in 2014, the SEC will implement additional rules from the JOBS Act that will allow those startups and funds to raise investment dollars from non-accredited investors (i.e., those who don’t meet the current income or net worth standards the SEC sets for allowing investments in private offerings). Despite the onerous ways in which the SEC plans to implement the new rules, these are significant developments for entrepreneurs who seek more and better access to early-stage capital.
While those changes will affect startups and investors across the country, there are other significant changes taking place closer to home. 2013 marked the passage of the South Carolina High Growth Small Business Access to Capital Act, which encourages local investors to allocate capital to homegrown startups through a 35 percent state income tax credit. At least 21 companies were approved as Qualified Businesses under the new program for last year, and we’ll know how much was invested by the end of January. Narrowing the focus even closer to our community, the Upstate Carolina Angel Network completed a record year in 2013, growing by 16 percent and investing over $2.3 million in 12 companies, including seven in South Carolina. That brings UCAN’s total to nearly $9 million invested in 32 companies over the last five years.
These national and local trends that took root in 2013 are likely to continue building momentum in 2014. Based on the new general solicitation rules, it’s a safe bet that you’ll begin to see a lot more advertising for risky startup investment opportunities. At some point during the year, equity crowdfunding will be legalized and everyone will have access to purchase stock in those companies advertising their offerings. However, as with any major shift in a marketplace, there will be a period of significant readjustment when chaos will emerge and a lot of dust will be kicked up that may take a couple of years or more to settle.
In the midst of that dust storm, the Upstate Carolina Angel Network will be working to improve the infrastructure for early-stage investing in South Carolina in 2014. Entrepreneurs will need help navigating the new rules and aggregating sufficient capital, and investors will need help sorting through the cacophony with a trusted source of deal flow, deal structuring and deal administration. To help bring order to the chaos, UCAN is working to establish the South Carolina Angel Network, a network of networks across the state for investors who may want to affiliate by city, by industry, or even by educational institution.
With well over 100,000 accredited households across the state, the South Carolina Angel Network is designed to help draw latent capital off the sidelines and into an asset class that supports promising local entrepreneurs (who ultimately create all the net jobs in the economy) while giving investors an opportunity to do well financially while doing good and having fun.
Look for more details about the South Carolina Angel Network in the weeks to come.
In order for the South Carolina Angel Network to fulfill its mission to help further the ecosystem for early-stage capital across the state, we’ll need strong partners – entrepreneurs, investors and sponsors. If you would like more information on how to get involved, please contact me.
2014 will be a year of continued change and opportunity for entrepreneurs and investors. We welcome you to join us for the ride.
