(EDITOR’S NOTE: This is the sixth and final article in our investment outlook series. We want to thank our participants – David Belitz, Eric Dobson, Scott Ewing, Tony Lettich, Ken Woody, and Grady Vanderhoofven for their input and continued commitment to building a strong entrepreneurial base in this region and state.)
We asked the region’s leaders in angel and venture capital for their thoughts about the outlook for investment capital in 2014. In the final article in the six-part series, we posed the question: “What else would you like to say?”
- Eric Dobson, Chief Executive Officer, Angel Capital Group. I am excited about 2014. The Angel Capital Group is growing in popularity, dealflow, geographically, and from an investable capital standpoint. We expect to invest in more deals and with more money in 2014. Crowdfunding will bring an entirely new dynamic to the industry, which is good in my opinion. The more times you step up to the plate, the more opportunities you have to hit a homerun.
- Tony Lettich, Chair and Managing Director, The Angel Roundtable. There is a potential for the development of headwinds as we move through 2014. As required by the Dodd-Frank Act, the Securities and Exchange Commission will study Accredited Investor Standards in 2014. One option to be studied is the potential increasing of financial thresholds for defining Accredited Investors by indexing them to inflation. If this were implemented, the thresholds would increase dramatically, potentially resulting in significant losses in the number of investors who qualify to invest as accredited investors. The Angel Capital Association has past (2010) data showing that such increases would reduce the number of angels by as much as 60 percent.
- Ken Woody, President, Innova. One of the other real benefits for the TNInvestco program was the fostering of relationships amongst the state’s VC firms. That should continue and is a very good benefit for all early-stage companies.
- Grady Vanderhoofven, Co-Manager, Meritus Ventures and Southern Appalachian Fund. The angel community has become increasingly sophisticated and increasingly important in supporting very young companies. At all levels (Federal, State, Local), we should encourage and support angel investing. It’s unclear right now what the long-term impact of crowdfunding will be, but it will be interesting to watch the evolution of crowdfunding as an avenue for getting capital to young companies. It is important that federal and state tax policy support the investment of private capital. For example, increasing capital gains taxes removes capital from the investment flywheel, making less capital available for investment in young companies. We must continually encourage and support the creation of new companies, as they are the engines of job creation in our economy, and the most promising companies should always be able to attract capital.