The Angel Next Door

Curious about revenue-based financing? In this episode, Marcia sits down with Denise Dunlap, co-founder of Sage Growth Capital, to discuss this unique model of funding, which combines elements of both loans and equity investments.Denise shares how her experience as an angel investor led her to start Sage Growth Capital, with a focus on supporting companies that may not qualify for traditional equity investment. With an emphasis on revenue-based financing, Denise explains how they offer funding to companies with recurring revenue streams, supporting businesses in various industries.Denise also sheds light on the lessons she and her partners have learned over the past couple of years. As they continue to invest in companies planning to raise equity funding, Denise discusses the unexpected recognition of their value proposition. She addresses the average check size they provide to companies and sheds light on the repayment timeline, dependent on the business's performance. Gain insight into the true cost of equity and the benefits of revenue-based financing in this captivating conversation.To get the latest from Denise Dunlap, you can follow her below!LinkedIn - https://www.linkedin.com/in/denisedunlap55/Learn more about Sage Growth Capital - https://www.sagegrowthcapital.com*All other companies discussed in this episode are linked on their website above. Sign up for Marcia's newsletter to receive tips and the latest on Angel Investing!Website: www.marciadawood.com And don't forget to follow us wherever you are!Apple Podcasts: https://pod.link/1586445642.appleSpotify: https://pod.link/1586445642.spotifyLinkedIn: https://www.linkedin.com/company/angel-next-door-podcast/Instagram: https://www.instagram.com/theangelnextdoorpodcast/TikTok: https://www.tiktok.com/@marciadawood

Can revenue-based financing revolutionize the way startups raise capital and allow anyone to invest for as little as $100? In this episode of The Angel Next Door Podcast, Marcia is talking to Justin Renfro from Wefunder, who heads up the Revenue-Based Financing division. Together they explore the potential of revenue-based financing as an alternative to traditional equity funding.What is Revenue-Based Financing? It's a unique way growing businesses can receive financial capital in exchange for a percent of ongoing gross revenues.Justin shares insights from his experience working with entrepreneurs and explains how Wefunder aims to democratize investing into startups. Marcia and Justin delve into the challenges faced by founders in raising capital, the infrastructure provided by Wefunder to support startups, and the importance of community-driven investment in fostering economic growth.To get the latest from Justin Renfro, you can follow him below!LinkedIn - https://www.linkedin.com/in/justinrenfro/Read more about Revenue Based Financing from WefunderLearn more about Sepia Coffee Project - https://wefunder.com/sepia.coffee.projectLearn more about Love Box - https://wefunder.com/loveboxLearn more about Neutral Ground - https://wefunder.com/neutral.groundLearn more about SW Basics - https://wefunder.com/swbasics Sign up for Marcia's newsletter to receive tips and the latest on Angel Investing!Website: www.marciadawood.com And don't forget to follow us wherever you are!Apple Podcasts: https://pod.link/1586445642.appleSpotify: https://pod.link/1586445642.spotifyLinkedIn: https://www.linkedin.com/company/angel-next-door-podcast/Instagram: https://www.instagram.com/theangelnextdoorpodcast/TikTok: https://www.tiktok.com/@marciadawood

Congress holds a great amount of influence on how easy it is for small businesses to raise capital.. This week on The Angel Next Door, Marcia speaks with Congressman David Kustoff, representative from the 8th congressional district of Tennessee. Marcia and the Congressman discuss his background and how he came to be a member of the House, as well as his work on the House Committee of Ways and Means introducing new legislation with hopes of making it easier for small businesses to raise capital.  Congressman Kustoff explains how he got started as an attorney in the Memphis area, eventually being appointed US Attorney for the Western District of Tennessee by President George W Bush. After serving as US Attorney, he returned to his private practice. Growing concerned with the direction he saw the country taking, he saw his opportunity to make a difference when a vacancy in the House opened in his district in Tennessee, and won the seat in 2016. Currently in his 4th term in Congress, David serves on the powerful House Committee of Ways and Means, which holds jurisdiction over taxes, health care, trade, and family support programs.  In talking with his constituents and businesses in his district, Rep. Kustoff hears a lot about inflation, supply chain and labor issues, and the difficulty small businesses have with navigating tough regulations when raising capital. He explains how in 2017 the Ways and Means Committee enacted the Tax Cuts and Jobs Act (TCJA). Among other things, TCJA greatly lowered the corporate tax rate, encouraging more businesses to be structured as C-Corporations, which can then benefit from the Qualified Small Business Stock (QSBS) provision of IRC 1202. QSBS makes capital gains from small business stocks exempt from federal taxes if they meet certain requirements. Marcia shares an example of how she benefited from IRC 1202 in one of her early investments, which inspired her to take even more money and put it back into the economy and help entrepreneurs.  Congressman Kustoff points out the importance of legislation that fosters the entrepreneurial spirit, especially given how, without new legislation, the TCJA provisions expire in 2025. It’s for this reason, Rep. Kustoff has introduced the Small Business Investment Act of 2023, which would protect and expand these provisions, provide incentives for investing in startups and small businesses, and make it cheaper for small businesses to raise capital. The Small Business Investment Act of 2023, changes the QSBS holding period for stock, currently at 5 years, to a phased approach, making these investments more attractive to investors. The bill also allows the ownership of convertible debt to count towards the holding period, and expands the eligibility to S-corporations. Congressman Kustoff hopes to gain some movement on the bill quickly, with a companion bill introduced by Senator John Cornyn moving through the Senate. He encourages any listeners with questions about the bill to contact his office.  This episode delves into how legislation from Congress greatly affects how small businesses raise capital and how the same legislation can make investments more attractive to angel investors. Enjoy!Click Here to read Marcia's profile on LinkedInClick here to learn more about Congressman KustoffClick here to read the press release about the Small Business Investment Act Learn more about the House Committee on Ways and MeansClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. This week on The Angel Next Door, Marcia talks with one of the five SEC Commissioners, Hester Peirce. Listeners get to hear Commissioner Peirce’s story on becoming a commissioner and her take on some hot topics in today’s investment arena.  Commissioner Peirce begins by discussing her background, starting off as a securities attorney at a private law firm. After making connections within the SEC, she became a staff attorney there for about 8 years. She left the SEC and worked for the Senate Banking Committee, while researching how to make regulation better and more efficient, before eventually returning to the SEC as a commissioner. She explains the role of a commissioner and how they work together to do what is best for U.S. based investors and business owners. The commissioners are not allowed to meet with each other unless all are present and it is public or publicly disclosed as a closed meeting. Despite this obstacle, Commissioner Peirce states that all the commissioners are independently talking to investors, companies, and people affected by SEC regulations and they are able to lean on the experience and knowledge of their colleagues to make better decisions together.Marcia and Commissioner Peirce go on to discuss fraud and the misperception that failure is fraud in the private investment world. They make the point that just because an investment fails doesn’t mean there is fraud, but it is often perceived that the failure may be due to fraud. Commissioner Peirce explains that this misperception is fueled by a lack of interaction with people actively engaged in private markets. They also touch on the recent bank failures and how having a variety of sources of funding is very important, as different companies rely on different forms of funding at different stages. In her role, it is important to Commissioner Peirce that she supports a variety of sources of capital formation that can fill the voids when other sources fail by creating a regulatory structure that makes sense, protects investors, and keeps the capital spigots flowing.  Lastly, Marcia and Commissioner Peirce talk about the accredited investor definition and diversity in capital markets. The commissioner worries there is a move to raise the thresholds to be an accredited investor, and she looks for ways that sophistication can  be determined outside of income thresholds. Although it is difficult to write legislation on issues that are not definitively measurable, she believes that education and experience can be used to counter the concerns that wealth is not a proxy for sophistication. Commissioner Peirce also discusses how there are alternatives for diversifying capital markets, but they are not always obvious to those searching. She explains we need to get the word out to founders that there are pools of available capital and that we need to get word to investors that sometimes they need to go looking where they haven't thought to look for the right investment. This is an intriguing episode that provides a unique perspective on investing and capital formation from one of the top regulators in the nation. Tune in to hear the discussion!Click Here to read Marcia's profile on LinkedInClick here to read about Commissioner Peirce on SEC.govClick here to read speeches and statements from Commissioner PeirceClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

Startup growth is everywhere including the middle of the country!Marcia talks with Congresswoman Ann Wagner, who represents the 2nd district of Missouri and is the highest ranking republican on all matters concerning capital markets, investor protection, and capital formation. She is the first woman to chair the House Financial Services subcommittee on Capital Markets. Congresswoman Wagner discusses why she ran for office, the entrepreneurial ecosystem of her home state, and the work she is doing in congress to help advance legislation to support small businesses and investors in the US.  Congresswoman Wagner starts off by telling listeners her background as the daughter and granddaughter of small business owners from Missouri. She recounts how she learned early on the value of a dollar and a good work ethic. Her father would say he wanted the government off his back so he could provide a service to his community, take care of his employees and provide for his family. Feeling privileged to now represent her constituents, the congresswoman believes it is critical to address the issues impacting their wallets. She discusses the work being done in her home district in the St. Louis area. She talks about the large startup ecosystem and how it is one of the fastest growing startup scenes in the country. She and Marcia mention how many of the “fly over” states are actually booming innovation hubs, directly affecting the nation’s economy, but how congress can do more to create more opportunities for these small businesses and investors. Congresswoman Wagner touches on several groups in the St. Louis area that are contributing to the growth of small businesses, such as St. Louis Arch Angels, 39 North, Cortex Innovation Community, NGA, and TRex Innovation Center.They go on to discuss Congresswoman Wagner’s work and goals as the chair of the Capital Markets subcommittee. She plans to pursue innovation and opportunity and provide oversight of the Biden Administration to hold financial regulators accountable, specifically the SEC and CFPB. With capital formation being a top focus of the subcommittee, by the end of April they will put together a major package of legislative bills focusing on public markets, small business and entrepreneurs, and retail investor opportunities. Congresswoman Wagner is optimistic these bills, which show bipartisan support, will be successful moving through Congress. In addition to the legislation, the congresswoman looks to hold hearings with SEC divisional directors to examine the deluge of proposed rules that she believes are solutions looking for problems and fail to consider the compliance costs and burden on smaller companies.  Finally Marcia and Congresswoman Wagner talk about the definition of accredited investor and the previous hearing held by the Financial Services Committee which included testimony from ACA Board Member Eli Velasquez. Congresswoman Wagner explains that Eli’s experience is exactly why the committee is working to reform the current definition and that she will be introducing the Increasing Investor Opportunities Act, which would amend the Investment Company Act to provide for private market access and increase retail investor exposure to private markets while maintaining the investor protections. She believes wealth is not a proxy for sophistication, and opportunities for wealth creation should not be reserved for the wealthiest Americans. Marcia also touches on a study completed by the Desert Angels in Arizona, which quantifies the significant economic impact their investments have made on the local economy serving as a benchmarking standard for other communities. This is a great episode for listeners to learn about some of the work being done in Congress to increase opportunities for investors and small businesses, and how these opportunities can provide a massive positive impact on communities throughout the country. Click Here to read Marcia's profile on LinkedInClick here to learn more about Congresswoman Ann WagnerClick here to read ACA's Data Insights on the Desert Angels impact studyMore on the House Financial Services CommitteeClick here to read about and watch the Financial Services hearing with Eli Velasquez  Click here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

This week on The Angel Next Door, Marcia talks with modern renaissance man Mark Herschberg. From MIT educator and cybersecurity professional to startup CTO (Chief Technology Officer) and author, Mark has worn many hats throughout his professional career. Despite his expansive resume, he and Marcia focus on his time spent in the world of startups, mostly as an executive, including 2 startups he is currently working on.  Mark starts by telling listeners about his journey of graduating from MIT and deciding not to go the typical wall street, classic tech, or consulting route. Instead he fell into the startup and investment world. As an operator at heart, Mark found that he enjoyed working with small/early stage companies and quickly became a career executive and CTO for those types of companies. He explains how his experience as an executive, which required him to evaluate the companies that were looking to hire him, has helped him be a more successful investor as well.  Marcia and Mark go on to discuss what would be the right amount of equity for each role in a startup. Mark tells listeners what he has seen in his experience, with companies typically setting aside 10-15% equity to be split between C-level employees. Lower level executives such as VPs or directors may receive 1-2% equity, while some companies may offer a combination of equity and money. Mark also explains different rounds of funding, such as seed rounds and series funding rounds (A, B, C), and at what stage a company may be in those rounds.  Mark then explains what a fractional C-suite executive is, a role that he has held in several startups for over a decade, specifically as a CTO or CTPO(Chief Technology/Product Officer) . As a fractional CTO, he is able to provide his expertise and guidance to a startup without breaking the bank, allowing them to hire more junior level employees at a lower cost. He expresses how he has seen some companies make the mistake of hiring junior level employees without having senior level guidance, and believes more companies will begin to rely on fractional executives.  Finally, Mark touches on 2 startups he is currently working on. He created an app, Brain Bump, which helps users retain information they learn from content such as books, podcasts, or blogs. Initially created as a counterpart to his book, The Career Toolkit, he is working on expanding the app’s reach for both consumers and content creators. He also is working on a startup in the cyber security arena, and tells Marcia about his concerns regarding today’s cyber security issues. This episode is packed with great insight from a remarkably educated expert in many fields. You don’t want to miss it!Click Here to read Marcia's profile on LinkedInClick here to read Mark Herschberg's profile on LinkedInLearn more about the Career Toolkit book and more resourcesCheck out the Brain Bump app hereClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

In this episode of The Angel Next Door, Marcia talks with Kim Banham, a partner at Connetic Ventures. Kim and Connetic Ventures have brought a new look to VC firms by using Wendal, an AI platform that allows one to make data-driven decisions that remove all bias from investing. Kim starts off by telling us how she joined Connetic 7 years ago, with a love for funding early stage companies that could not get traditional bank loans, specifically companies building disrupting technology and platforms. The team at Connetic Ventures, based in Covington, KY, realized that they needed to build a technology to change the way VC and funding was occurring and allow them to make smarter, unbiased decisions to be successful in early-stage investments. Now every company that applies for funding through Connetic first goes through Wendal, which they call their ‘junior analyst’. Kim explains how Wendal works, asking every founder the same questions, eliminating any bias of age, race, or gender, and giving each company a star rating to allow the application process to move quickly. Connetic is able to respond to applicants within 7 business days and invest in as little as 2-3 business days after the first call with the founder. To date, they have invested in about 100 companies with 64% of the founders being female or a minority, which is about 10 times higher than the industry norm, without that metric being a specific goal of the firm.  Kim goes on to explain how they use a personality assessment through Wendal called TeamPrint, which tells them how each founder and leadership team member is wired. The platform is able to provide feedback on the potential of how successful the company could be, again without bias. Every founder that applies for funding (about 4500 so far) is provided this feedback so they can make more informed decisions on who to hire, what leadership gaps need to be filled, and in which roles each member of their team would be best suited for the company’s success.  Kim encourages all founders of early-stage companies to apply, reiterating that every company receives the data and feedback from Wendal, despite whether they receive funding.  Finally, Marcia and Kim discuss the importance of time for early-stage companies, as founders often spend a great amount of time fundraising when they should be growing the business. Connetic Ventures and Wendal are working to minimize the time spent on fundraising, eliminating any bias from that process, and allowing access to capital for all founders. Tune in for some great insight on how new technology is changing the way entrepreneurs can receive capital, while providing real data to help them be more successful!Click Here to read Marcia's profile on LinkedInClick here to read Kim Banham's profile on LinkedInClick here to learn more about Connetic VenturesClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

This week on The Angel Next Door, Marcia sits down with fellow angel investor Dawn Batts. After years of experience in investment and pension fund management, Dawn noticed a trend of money moving away from traditional assets such as stocks and bonds and into private equity investments. This change brought her to the world of angel investing and eventually to her co-founding Detroit based angel group Commune Angels.  Dawn starts off by discussing her background and how she discovered the world of angel investing. At the beginning of her journey, she invested in several companies at the ‘friends and family’ stage. After receiving a call from a friend about starting an angel group, Dawn and a few others came together to form Commune Angels with the idea of creating a new type of angel group. Dawn explains how she and the other co-founders were very intentional and diligent in deciding the structure and image of Commune Angels prior to launching in August 2020. The founders looked to create a safe and inclusive environment that focused on members’ experience as well as financials. They thought lower membership fees and lower investment minimums would allow more access to diversification for their members, but they also made sure to be founder friendly.  Marcia and Dawn go on to discuss the importance of education in investing. While Commune Angels has 4 internal education sessions a year, Dawn promotes education outside of the group, primarily through cohorts. In 2021, she led a cohort backed by 1863 Ventures to find emerging investors and curate an experience to introduce them to angel investing and engage in the ecosystem in different ways. Dawn explains how cohort education allows people to build connections and start to build a network that can help build future success and bring more investment opportunities.  Finally, Dawn touches on the Catalyst Angel Program in the Great Lakes region, which she works with to help emerging Black, Latinx and/or female investors learn more about investing and build networks of connections, many through cohort education. She also gives a couple examples of companies that the Commune Angels group has invested in so far. This episode provides some great insight on how the angel investing world can adapt to allow more opportunities for more investors and how education is a crucial part of that change.Click Here to read Marcia's profile on LinkedInClick here to read Dawn Batt's profile on LinkedInLearn more about Commune AngelsClick here to read more about the Catalyst Angel ProgramCheck out AJA LabsLearn more about EspervitaClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

In this quick episode of The Angel Next Door, Marcia talks about today’s accredited investor definition, how that definition limits who can invest, and how change can get more capital into the hands of underrepresented founders. She reviews the current requirements to be an accredited investor which is mainly based on wealth and income and how the Angel Capital Association plays a role in bringing awareness of the impact of changes to the definition to our legislators.  Recently, the House Financial Services committee held a hearing on “Sophistication or Discrimination? How the Accredited Investor Definition Unfairly Limits Investment Access for the Non-Wealthy and the Need for Reform.” Marcia details how Eli Velasquez, fellow ACA board member and previous guest on the podcast, testified at the hearing, telling his experiences in the investing world. Eli discusses how he had built an impressive 20+ year resume that provided him the opportunities to evaluate thousands of investment deals, but not participate in the deals because he was not an accredited investor. He witnessed a young inexperienced investor leverage his family trust fund to become accredited and make deals, despite himself being only $20,000 from the income threshold to become accredited and having a wealth of experience.  Eli explains in his testimony that he missed out on a generation’s worth of opportunities because of the definition of an accredited investor, before he was finally able to write his first check in 2020. Marcia goes on to provide examples of changes that could be made to expand the definition of the accredited investor. These changes could lead to positive impacts on who can invest and, with that, which founders receive the capital they need to grow their businesses. Listen in for a truly impactful story. Click Here to read Marcia's profile on LinkedInClick here to read about and watch the Financial Services hearingClick here to read Eli Velasquez's profile on LinkedIn  Click here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com

For this week’s episode, Marcia returns to discuss impact investing and Donor Advised Funds (DAFs) with guest Jenny Lane. Jenny has a background in equity crowdfunding and nonprofit fundraising with a passion for community development, and now, as the CEO of the Ohio Impact Fund, she is working on putting DAF dollars to work investing in early-stage companies.  Jenny starts off by telling listeners how she became aware of private investing about 5 years ago. She worked for a company that built the first equity crowdfunding campaign before there were platforms like StartEngine to make it easier. She tells us how she did a lot of work for breweries and restaurants and touches on how those types of businesses perform well with equity crowdfunding.  Although working in equity crowdfunding allowed Jenny to have an impact on who received funding, she wanted to have an even bigger say and be able to uplift underrepresented founders and business models. She explains how she was introduced to someone who runs multiple impact funds and how DAFs can be used to provide capital to startups and generate returns that can be used for charitable purposes or future investments.  Jenny now runs the Ohio Impact Fund, with a focus on putting capital into startups that solve social, economic or environmental issues through their product or service. The fund has already invested about $1 million in 10 different companies, and provides us with a few examples of companies they have invested in.  Marcia and Jenny go on to discuss more about how investments into startups through the money in DAFs can be used to elevate for-profit companies while also making the world a better place. Jenny tells listeners because there are no laws stating how or when DAFs need to give out money, many funds continue to grow as the donated dollars sit dormant. Ohio’s 6 largest cities have over $1.7 billion sitting in community foundation DAFs. Jenny is working hard to connect national organizations that know how to move this capital legally and safely to the managers of the large foundations/DAFs.  Marcia and Jenny end the episode by touching on how Ohio is looking to help startups grow through programs like SSBCI (State Small Business Credit Initiative) and JobsOhio, and how the driving force is collaboration over competition. This episode is packed with great information on how DAFs can help both private startups and community development through charitable returns. Listen in to learn more!Click Here to read Marcia's profile on LinkedInClick here to read Jenny Lane's profile on LinkedInClick here to learn more about the Ohio Impact FundClick here to learn more about SSBCIClick here to learn more about JobsOhioClick here to find out more about the Angel Capital AssociationTake courses to learn how to be an angel investor at Angel University - click here for info!Want to reach the Angel Capital Association? CLICK HEREHave ideas for the show?  Email us at theacaangelnextdoorpodcast@gmail.com