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Search results for «ACE Portal»

Insights

Growth of Private Company Investing: An ACE Portal Event

An ACE Portal hosted and VC Experts moderated panel on “How Integrating Platforms, Data, and Analytics Will Define Private Company Investing.”

Panelists will include representatives from IPREO, Crowdnetic, ACE, VCE, and TAAPS.

The panel will be followed by a visit to the NYSE Trading floor to see the Closing Bell ring.  After the Closing Bell, there will be a Cocktail Hour with a select audience of family offices, institutional investors, and leading investment banks.

 

 

AIMkts Interview with ACE Portal

The following interview (by Alicia Purdy) originally appeared on Accredited Investor Markets (AIMkts) and can be found at http://www.accreditedinvestormarkets.com/a-few-minutes-with-ace-portal.

1. What sort of gap/need in the private investment market spurred the inspiration for ACE Portal?

Peter Williams (PW): The initial basis for ACE Portal was born from practical experience.  Having worked in investment banking for close to a decade I was pulled into numerous private placement processes and was amazed at the inefficiencies in that process.  On the investment banking side the process is very labor intensive, with most investor interactions recorded manually.  Investor reach was highly limited and literally relied on a couple of guys and a telephone as the state of the art way to reach the investment community.  While there are over 30,000 qualified institutional buyers in the US alone, collectively we, the bankers, would determine which 25-75 investors would be the only ones to even know about the specific transaction we were marketing.  This took months and often resulted in failed transactions.  Ultimately I thought there had to be a better way to bring efficiency to this market, to increase transaction speed and success rates, all in a fully compliant manner.

Carl Torrillo (CT): For me, the inspiration is about democratizing access to capital for deserving companies and in turn democratizing access to deal flow for investors, which I believe ultimately helps stimulate growth in the economy.  The catalystfor me to leave my profession and join forces with Peter and Rich was the passage of the JOBS act.  This created the practical opportunity to address the grand vision of streamlining a tremendous (~$1 trillion) market.

Richard Pistilli (RP): What I found in the private investment market was a common structural impediment towards streamlining processes which was driven by antiquated systems and aversion to change.  The challenge to introduce efficiencies through innovation resonated with me, and it’s what I saw in ACE.  The private capital markets are in need of structural solutions that can transform the asset class, which can then enhance capital flows and accelerate economic growth.

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Placement Agent Indemnification Agreements & Their Effect on PE & VC Funds

Joe Bartlett, of VC Experts, weighs in on indemnification provisions within the role of placement agents raising capital for alternative funds and speculates that they really just foster a circular flow of funds when exercised. This logic begs the question: Does the way these provisions are constructed render them meaningless?

The fund raising process for most of the private equity funds…venture, leveraged buyout, secondary and others…is an arduous business. Alan Patricoff remarked several years ago that after he split from Apax to form Greycroft it took him, a Hall of Fame venture capitalist, three years (as I recall) to reach a final closing on the fund he was sponsoring. Accordingly, it is customary for funds to employ experienced placement agents to assist in the fund raising process.
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Requirements of a Reg D Private Placement

Raising capital and investing in private companies involves an intricate process for companies and investors that is governed by stringent regulatory requirements. While the introduction of Rule 506(c) under the JOBS Act does potentially address some of the issues around advertising and broader reach, the Regulation D offering process remains a complex mix of compliance, marketing, and due diligence. [For more on the stages of a private placement see this post]. Read More

The Placement Agent’s Dilemma

If a person is sick, they see a doctor. If a person has legal troubles, they see an attorney. Logic would then suggest that a person in need of financial planning would seek the assistance of an investment professional.

This maxim however is not always adhered to within the anomaly that is the capital markets. Rather, it is tested each and every time technological innovations are made. From day-trading to house-flipping, technology advancements seeking to improve market efficiencies often drive an unintended corollary whereby individuals are tempted to disrupt or replace the entire market infrastructure. Call it hubris or ignorance, but there is something deep in the American psyche that murmurs “I am a savvy investor or entrepreneur and I don’t need professional help engaging the market!” Read More

The Role of Placement Agents in Fund Formation

ACE Portal CEO, Peter Williams, interviews Joseph A Smith, a Partner at Schulte Roth & Zabel LLP, about the role of placement agents in fund formation. Key topics of discussion include:

  • Whether Placement Agents are necessary or helpful in raising capital for Funds
  • What types of Funds typically use agents versus those that do not
  • What due diligence placement agents typically engage in  and the key factors that lead to successful engagements between a fund and an agent
  • The key factors needed for a fund to have an in-house fundraising team
  • Whether new market innovations and types of fundraising platforms will dis-intermediate placement agent

You can also see Joe discuss Trends in Private Fund Formation


Schulte Roth & Zabel LLP is a multidisciplinary firm with offices in New York, Washington, D.C. and London. As one of the leading law firms serving the financial services sector, SRZ regularly advises clients on investment management, corporate and transactional matters, as well as providing counsel on securities regulatory compliance, enforcement and investigative issues.

Private Portals are Here: Proceed with Caution

Want to hear a very poorly kept secret? Access to private investment opportunities is extremely limited and inequitable. This has been true on Wall Street for decades due to some rather stringent regulatory hurdles governing the marketing of private offerings, as well as the critical need to keep private deal information, well, private. Historically this has meant that investment banks hired on behalf of private companies and funds to raise capital have been left to manage closed, manually-driven processes where only their small roster of “known investors” were even contacted about the opportunities. Given the size of the new issue private markets (roughly $1 trillion per annum), this is quite remarkable. Fortunately, the tides are now turning.

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Placement Agents & Capital Raising: Value & Conflicts

Peter Williams, CEO and founder of ACE, interviews Jonathan Cunningham,a principal at Aequitas Advisors, about the critical role of placement agents. Peter and Jonathan talk about the role of placement agents in transactions and discuss at length the nuanced conflicts issuers should be aware of in capital market transactions. Finally they touch on how the JOBS Act may (or may not) alleviate some of these problems moving forward. This post is related to Richard Pistilli’s discussion of the role of agents.

Using A Placement Agent in Early-stage Rounds

This article first appeared in the “Introduction to VC and PE Finance” Encyclopedia by VC Experts

Should I use a Placement Agent to Raise Money

Founders, who are desperate for financing, debate whether the faucet will turn on if they engage a placement agent. This is a question to be addressed in a real-world context. In the first place, the great majority of first-round financing is not economically interesting to an investment-banking firm. The fee for a placement is usually in the range of 2 to 5 percent of the amount raised. Assuming a $1 million first-round financing, a fee of $20,000 to $50,000 is not likely to attract many takers in the investment-banking fraternity, when fees for acting as financial adviser in contested merger-and-acquisition transactions run into eight figures. There are exceptions to this, as in any other proposition. Encore Computer, because of the splendid reputation of its founders, attracted a high degree of interest from major-bracket investment bankers in the seed round; William Poduska, on leaving Apollo Computer and organizing Stellar, was able to titillate investment-banking appetites to a fever pitch. (Neither firm, it should be noted, remains as an independent entity.) However, the traditional founder is wasting his time beating down the doors of the elite investment bankers to help raise money in the early rounds. Smaller investment-banking houses sights are set lower than Morgan Stanley or Goldman Sachs, are more likely candidates, but even they are not enthusiastic about hitting the pavement to arrange a first-round investment because the amount of work is enormous and the payoff is often uncertain.

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Fueling American Entrepreneurship

A recap of last year’s Milken Institute panel on Entrepreneurship and job creation that still rings true today. The panel features ACE Portal’s CEO, Peter Williams.

In the post-financial crisis economy, start-ups and small businesses have struggled to access the capital necessary to create jobs. Credit markets have tightened, traditional early-stage equity investors are risk-averse and public market IPO activity has contracted. What can we do to improve the financial landscape for launching businesses? What changes to securities laws and innovative approaches, whether technology, government, or investor-based, will free up capital, and what can be done to develop entrepreneurial hubs and ecosystems across the country?

Crowd Capital and Online Finance

This is a replay of a Milken Institute thought leadership panel from last year focusing on the role of online platforms in the capital raising platform–both in terms of institutional capital raising, crowdfunding, and P2P. It features ACE Portal’s CEO, Peter Williams, in addition to Angel List, Prosper, Indiegogo, & Guggenheim Venture Partners.

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The Renewed Family Office Interest in Direct Investing

In this interview Michael Zeuner, a Managing Partner at WE Family Offices, discusses the renewed appetite among family offices for direct investing. Michael’s discussion with ACE Portal’s CEO, Peter Williams, is wide-ranging yet succinct. They cover why families are gravitating from private equity into direct investing, fee arrangements within transactions, sourcing deal flow, conducting expert due diligence, and organizing amongst families.

 

About WE Family Offices

WE Family Offices is a different kind of wealth advisor. WE stands for Wealth Enterprise and the core of their work is based on the simple tenet that families who are able to successfully manage their wealth do so as they would a business. They build Wealth Enterprises.

Founded on a set of core beliefs, their mission is to work with each client – each different, each complex in their own way – to offer them insight into their wealth management, give them the information they need to make critical decisions, and support to manage their wealth successfully.  It’s about control. It’s about clarity. It’s about knowing where you are in relation to your goals. At your level of wealth they understand it can be overwhelming, but WE Family offices is here to help.

Raising Capital for your Startup – Legal Considerations for both Founders & Investors

In this second segment of a two-part series (see Part I – “Answering Common Legal Questions When Starting Your Startup), ACE Portal’s General Counsel, Jason Behrens, and Evan Bienstock, a partner with Mintz Levin, discuss several key terms and considerations that are applicable to start-up capital raises.

For anyone who has just formed a new company, is beginning to consider capital raising for their company or is interested in start-up financing generally, this interview is particularly informative.

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Your Deal But My Terms – A Primer on Private Market Terms & Conditions

In this episode of Insights, ACE Portal’s Co-Founder and CFO, Carl Torrillo, discusses deal terms and conditions with Ross Barrett, Co-Founder and CEO of VC Experts.  The interview drills down into areas of interest for private market investors.

Specific topics covered include:

  • Anti-dilution provisions
  • Valuation considerations
  • Maintaining management incentives (the law of unintended consequences)
  • Dividend rates (accrued or not)
  • Covenants and Board Rights

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7 Fundraising Tips for Startups Pursuing VC Money

In this article you will find  a collection of fundraising advice geared towards pitching a traditional Venture Capital Firm.  Most of Joe’s advice, however, would apply just as well when using an Online Portal or pursuing other fundraising avenues. To summarize the efforts in relation to online portals: find the right Portal with the right investor base for your offering, present the material in an easily digestible and engaging format, follow through, and don’t stop your other complimentary efforts. If you think your company is right for VC Funding then here are Joe Bartlett’s seven key pieces of advice:

Rule #1: Pitch the Appropriate Audience

VC funds collect huge sums of cash, and managers must put it to use within four or five years, or risk losing it. Despite their vast resources, venture funds’ staffing is generally lean and mean — managers cannot afford to look at investments that involve, from their perspective, trivial amounts of funding. If you’re looking for very early-stage funding (the so-called “angel round”) or financing under, say, $5 million, don’t go to a professionally managed venture-capital fund. Find angel investors instead. They specialize in taking a company from inception to the next round of financing. Read More

Private vs. Public Market Technology Trends & How to Invest

Privately held technology companies are attracting a great deal of interest and rightfully so. In this interview, David Garrity, a frequent CNBC Technology Pundit and a Principal at GVA Research and a Managing Partner at Whitemarsh Capital, talks with Jason Behrens, the ACE Portal General Counsel, about private vs. public market trends in the tech space.

Garrity covers  market adaptations to the longer life cycle of private companies in the tech space. Specifically he addresses valuation concerns in the technology sector, emerging trends in fintech (financial technology), investment strategies in the private and public sector, the idea of strategic acquisitions, and how individual investors can participate in the early-stage returns of the tech space despite the longer private life-cycle of these companies.

In other interviews with David he discusses:

 

Top 10 Best Practices for Marketing Your Deal

If you’re marketing your next (or first) big fund or deal – we know that you’re probably wondering about crowdfunding, deal portals, TPMs, investment banks or taking the family office route as some of the best angles to get funded. Chances are you’ve already done at least one of these in the past on a prior transaction or are contemplating them right now.

The questions to consider in pursuing the great balancing act of marketing your deal in 2014 and 2015 are designed around what best practices to use to successfully complete your raise, do it in an efficient manner, and be safe in your approach. Read More

Investor Verification Versus Suitability on Direct Investments

In this interview, ACE Portal General Counsel, Jason Behrens, interviews Joe Bartlett, the Co-founder of VC Expert and Special Counsel at McCarter & English. Their conversation focuses specifically on the difference between investor accreditation and suitability, which is a vital but often obscure topic for capital raisers. The conversation also narrows in on suitability in a post-JOBS Act context. Jason and Joe’s conversation is a nice precursor for listening to Dan Gorfine of the Milken Institute discuss the future of suitability in this post. or diving into Joe’s more in-depth written pieces on what steps to take to verify an investor’s status.

The Latest on Private Company Trading Platforms

The private capital markets continue to grow, both in terms of primary and also secondary transactions, including liquidity events for pre-IPO companies.  How will new regulatory changes, including the JOBs Act, impact the development of the market?  What online platforms are emerging that can help bring efficiency to the private placement marketplace and increase liquidity for private shares?  And how does this all impact and improve equity compensation programs for private companies?

 This webcast [transcript below] entitled “Private Company Trading Markets: The Latest” hosted by CorporateCounsel.net brings together industry leaders including Peter Williams, CEO of ACE Portal, Gregg Brogger, President of Nasdaq Private Markets, Annemarie Tierney General Counsel of SecondMarket and Dave Lynn, Partner of Morrison and Foerster to discuss their insights and these topics and provide their views on how the market will shape up. Read More

Private Markets & Investor Verification under the JOBS Act

In this interview, ACE Portal’s CEO, Peter Williams, interviews Daniel Gorfine, the Milken Institute’s Director of Financial Markets Policy and Legal Counsel, on how the JOBS Act (and specifically the provisions around 506(c) and General Solicitation) has created a new significance around the definition of what it means to be an accredited investor. Their conversation is important for any company thinking through whether to use Rule 506(c) which allows you to mass market–or generally solicit–and some of the special considerations that need to be thought through around the heightened investor suitability requirements to be found there. This dialogue takes on added significance because the SEC is revisiting the definition of an accredited investor this year under the requirements of Dodd-Frank. This video is closely related to Joe Bartlett’s discussion of suitability and verification as well as his in-depth post on how to actually certify accreditation. Read More

Top Ten Sources of Data, News, and Research on Alternatives

As the Alternative Asset Class continues to mature and evolve, the increased interest and scrutiny on the sector has led to more transparency.  But data is still more difficult to come by than it is for the public securities. As a result, professionals rely on certain key information resources on an almost daily basis.

From our perspective at the DTCC – Alternative Investment Products Division, we are constantly analyzing and evaluating these informational news digests and data feeds in depth.  We have found that there are many pretenders, and only a few resources that have stood the test of time (or show promise). What follows is our/my go-to list for real value-add information for news, research, and data.

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Raising Capital in Today’s Environment

David Garrity, Principal at GVA Research and a Managing Partner at Whitemarsh Capital, talks with Jason Behrens, the ACE Portal General Counsel, about the evolving paradigm in today’s capital raising environment. They cover:

  • Access to capital vis-a-vis the JOBS Act
  • Issues of adequate due diligence
  • The role of technology and platforms in facilitating better information disclosure and investor protections
  • How broker-dealers are reacting to changes facilitated by the JOBS Act
  • Why investment banking activity is consolidating and the potential problems that this creates for capital raisers
  • Shortcomings of the JOBS Act relative to compliance, due diligence, and protection

See David Discuss the transition from a Private Company to a Public Company

 

Reasonable Steps to Verify Accredited Investor Status

This article first appeared in VC Experts’ excellent comprehensive summary of the JOBS Act on March 31, 2013. While over a year old, the guidance below still stands to the best of ACE Portal’s knowledge. You can also see Joe’s video interview discussing the topic as well as the video from Dan Gorfine of the Milken Institute.

The following discussion fleshes out a checklist of ‘safe harbors’ when the issuer and its counsel are faced with a requirement that they take “reasonable steps to verify” accredited investor status. The pending SEC Regulations on the JOBS Act, Title II may list a safe harbor or two; but, if so, the same are not likely to be exclusive. Hence, my personal contribution.

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Navigating Change in the Private Capital Markets

With over $1 trillion in annual offerings, the U.S. market for issuing private securities is an exceptionally large, yet relatively unfamiliar asset class. What is a private security?  How does this market operate and why don’t I know more about it?  The following White Paper attempts to shed some light on this opaque marketplace for both issuers seeking to raise capital and investors looking for new opportunities.  So why now?  Because the private capital markets are in a transformative state.  Understanding the dynamics behind this asset class is an imperative for all market participants. This ACE Portal White Paper covers the following topics:

  • Defining a private security
  • Explaining why private securities should matter to you as an investor
  • Outlining key market challenges
  • Explaining how a private offering works
  • Covering the historical evolution of this market
  • Discussing recent changes and catalysts for private securities

Click here to download the full paper: Navigating Change in the Private Capital Markets.

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The Dividing Line Between Public and Private Markets Has Been Breached

This article, originally titled “The 180 Degree Turnaround in the U.S. Equity Markets: The Dividing Line Between Public and Private Has Been Breached” first appeared in the “Jumpstart our Business Startups Act (JOBS ACT) Guide compiled by VC Experts

Public and Private Market Divisions Blurring

For 75 years, the rules in this country governing capital formation for high growth enterprises have not changed. There are two categories … (i) public companies which float equity securities e.g., common stock in public offerings with shares publicly traded on various exchanges; and (ii) private companies financed by placements to a limited group of investors pursuant to exemptions from federal and state registration requirements, the shares changing hands infrequently until and unless the company goes public.

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The Original JOBS Act: A Summary

This Post originally appeared on the VC Experts Buzz Feed and was written by Lane T. Watson and Bion Piepmeier of Day Pitney LLP shortly after the passing of the JOBS Act. It provides a very well crafted snapshot of the originally passed JOBS Act and does not reflect any subsequent updates. For a review of the JOBS Act in the two years since it has passed see this interview.

After a comparatively brief debate in Congress, President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) on April 5, 2012. The JOBS Act enjoyed an unusual level of bipartisan support in the hope that the new law’s provisions streamlining the initial public offering process for emerging companies, enhancing the private placement market and leveraging the Internet to raise capital for small companies will result in the creation of new jobs. In this alert we consider the three provisions of the JOBS Act dedicated to facilitating nonpublic offerings of securities: Title II, which allows for public solicitation in connection with certain Rule 506 and Rule 144A offerings; Title III, which creates a new private placement exemption for crowdfunding via the Internet; and Title IV, which may breathe new life into the otherwise little used Regulation A offering exemption. For a comprehensive overview of these changes to the Private Markets see the ACE Portal White Paper.

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The Practical Application of General Solicitation

ACE Portal’s user base of registered placement agents has warmed to the idea of general solicitation

Given the fanfare surrounding the passage of the JOBS Act, most industry participants are likely familiar with Title II which created the framework for entrepreneurs and fund managers to publicly advertise that they are fundraising. In short, Title II created a new exemption, termed “506c”, which allows an issuer to advertise that they are raising money / generally solicit investors for their capital raise. This provides issuers (and their placement agents) unprecedented latitude to reach out to investors, as compared to offerings made under “506b”, where marketing is limited to investors with whom an issuer or their agent has a substantive pre-existing relationship. (For a more in depth review on the different offering formats, please refer to our White Paper, “Navigating Change in the Private Capital Markets”).

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Everything You Want to Know about Private Equity

This is a comprehensive set of answers to many of the typical questions investors have regarding private equity. The answers are roughly organized into sections along these lines: General questions/background, legal questions, performance questions, due diligence questions, and exit questions. That said, there is overlap between the answers.  The author’s originally published this article for VC Experts, while most of the information is current (and all of it is informative) there have been some changes with the Dodd Frank Act. In particular this is true of the information related to the investment adviser registration. We will add some updated information to that section in the near future. Read More

Employee Incentive Plan Alternatives After a Down Round

Employee Incentive Plans for Privately-Held Companies

Despite the recent improvement in capital markets activity, many small, privately-held technology companies continue to face reduced valuations and highly dilutive financings, frequently referred to as “down rounds.” These financings can create difficulties for retention of management and other key employees who were attracted to the company in large part for the potential upside of the option or stock ownership program.

When down rounds are implemented, the investors can acquire a significant percentage of the company at valuations that are lower than the valuations used for prior financing rounds. Lower valuations mean lower preferred stock values for the preferred stock issued in the down round, and as preferred stock values drop significantly, common stock values also drop, including the value of common stock options held by employees.

Consequently, reduced valuations and “down round” financings frequently cause two results: (i) substantial dilution of the common stock ownership of the company and (ii) the devaluation of the common stock, particularly in view of the increased aggregate liquidation preference of the preferred stock that comes before the common stock. The result is a company with an increasingly larger percentage being held by the holders of the preferred stock and with common stock that can be relatively worthless and unlikely to see any proceeds in the event of an acquisition in the foreseeable future.

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Evaluating a Multi-Family Office

Multi-Family Offices are more and more common. Are they right for you?

The family office, a product of the early twentieth century, is rapidly evolving in response to a number of factors: the turmoil from the recent consolidation and personnel changes in financial services firms, a heightened sense of the need for improved risk management and objectiv­ity and the high cost of attracting and retaining the professional talent needed today to advise and serve family members on a wide range of issues.

Just a couple of decades ago a fortune of $50 million was more than sufficient to justify directly employing a staff of accountants and in­vestment managers to keep track of the family finances, including the holdings of various trusts and foundations. Today, the “break even” point is closer to $250 million and climbing. Hence, many former single-family offices have grown into multi-family offices (“MFOs”), offering unrelated families the ability to share a CFO, CIO, tax professionals, and experienced administrative staff as well as valuable intellectual and technology resources.

In many ways it has parallels to the emergence of fractional jet ownership as high net worth individuals ask, “Given my needs, would I rather own all of a single engine plane or a share of a private jet? And, would I like to pay someone else to worry about hiring the peo­ple to fly it and care for it, handle security, do the safety checks, update the insurance and all the other hassles of maintaining a group of personal employees?” Similarly, contracting for a “share” of the staff at an established MFO often can securely provide access to talent, processes, intellectual capital and sys­tems that simply cannot be justified at lower asset levels.
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Figuring Out Your Equity Compensation at a Startup

In our travels, we’ve talked with many folks who work at startups and two common threads have emerged:

  • Startup employees don’t have sufficient avenues for liquidity, and 
  • Startup employees don’t have a clear understanding of how they are paid.

The former is a primary reason why EquityZen does what it does and the latter is the topic of this post.  We will break down the basics of incentive compensation at startups, survey tax considerations, and identify key points to raise with employers during compensation negotiations.
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Crowdfunding as a Risk Reduction Tool for Socially Responsible Investing

Entrepreneurs and investors have a growing interest in building and funding companies that integrate people, planet, and profit. But despite market demand for goods and services with environmental and social value, startup ventures based on these values are typically perceived as higher-risk or lower-return, and often struggle to maintain their unique identity as they trade equity for capital.

Crowdfunding can be a powerful tool that enables a socially responsible company (SRC) to overcome these challenges, resulting in more and better opportunities for socially responsible investing (SRI). But how does the power of “the crowd” empower new startups and reduce risk for investors?
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Key Regulatory Considerations for Alternative Funds in the EU

In this interview, Peter Williams the ACE Founder and CEO, interviews Michael Nobes, the CEO of Sixbridges Capital, about the complexities of the private fund space with an emphasis on doing business in the European Union. In particular, their conversation focuses on the impact of the Alternative Investment Fund Manager Directive (AIFMD) on compliance and cost of doing business.

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Transaction Readiness – Will you be Ready if a Suitor Comes Knocking?

In this interview, ACE Co-Founder & CFO, Carl Torrillo, discusses the concept of ‘transaction readiness’ with Jeremy Swan of CohnReznick. Jeremy covers a range of topics to help you prepare your business for a potential investor or suitor and discusses why this can be important strategically–even if you are not immediately contemplating a transaction. To quote Jeremy: “if you’re not ready when a suitor comes knocking, then it’s too late.”

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The Business Metrics Required for Raising a Series A Round

After closing our seed round a few months back, my co-founders and I decided to figure out what traction we’d need to reach the next fundraising milestone: Series A. I was surprised to find that there’s not a great single resource on the internet that sets out current market VC expectations for Series A companies. So we’re now providing that resource. We did a lot of digging into this, including asking mentors, current investors, and prospective investors. Here’s what we found. Read More

The “Crowd” May Just Revolutionize Direct Investing

Traditional versus New Models of Capital Raising

Private capital raising has typically hinged on companies and funds being able to connect to a narrow base of large institutional investors. This historical focus on only tapping a select group of large investors is largely a byproduct of a regulatory and technological framework in which the costs—whether in time, money, or compliance risk—of accessing more investors outweighs the benefit of receiving more numerous smaller checks. New innovation and new regulation are changing this paradigm. [See ‘Fundraising Post JOBS Act‘ for more]  As this space evolves, I believe the new “normal” in private capital raising will include substantial funds being raised by a larger pool of smaller investors that have been aggregated via low-cost and scalable technology solutions.

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Evaluating Private Equity Performance: Looking Beyond IRR

How do you best evaluate the performance of a private equity fund? Is there one right way? Why is the popular Internal Rate of Return  popular and potentially flawed? How do you truly gauge a manger’s performance and compare it to others? How do you select the best PE Fund Manager? The answers to these questions not only take you beyond that IRR but also beyond the spreadsheets and all the numbers. This guest post, originally from Private Equity International and featured in VC Experts’ Guide to Private Equity, investigates how science and art meet in evaluating private equity  performance.

 

A High IRR Gets Attention

“Just look,” smiles the placement agent, “at those IRRs. These guys know how to deliver serious returns.” The head of private equity investment looks at the memorandum on his desk and can’t help but revisit the chart showing annualised IRRs for the private equity firm’s previous funds. The numbers look impressive. And that’s one reason why IRRs matter so much in private equity: a high IRR figure for your fund has been shorthand for saying that you’re very good at making money. When you’re out fund raising, competing for the attention of an investor who is wary of taking a meeting and quick to remind you how busy they are, an eye-catching IRR is a great attention grabber. “Sure you’ll have investors telling you that IRR doesn’t mean anything to them, but you still find them sniffing round the number as soon as the conversation starts,” says one general partner at a UK buyout firm who regularly pitches to investors.

To declare that IRR is an empty formulation would be wrong, but to suggest that it has been significantly compromised in the eyes of many investors is not.
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The Financial Decisions Throughout the Start-Up Life Cycle

This post was written by Steven Eliach, a Principal of Marks Paneth & Shron LLP. and Jeanne P Goulet, CPA, a tax specialist at the firm. It originally appeared in VC Experts guide on PE and VC under the title “Road Map of a Start-Up and the Entrepreneur.” In this article Steven, the principal -in-charge of his firm’s Tax Practice, walks through the importance of sound financial planning in various stages of a startup’s life cycle. His summary brings up a comprehensive list of issues to be aware of including IP strategy, jurisdiction and corporate structure questions, structuring of equity splits for founders, and the operational realities of running a business.  As if this was not enough, the post also highlights the issues employees must be aware of related to their non-cash compensation. This article is highly recommended for entrepreneurs at any stage of growing their business.

 

The Financial Decisions & the Start-Up Life Cycle

A start-up venture is not just about product development, marketing and sales. It is a constant search for a business model that ultimately will result in a great product market fit.

During the course of this endeavor, the financial needs of both the entrepreneur and the business can be complex. The financial needs of the entrepreneur and the business model run on two parallel paths and can change substantially over the life cycle of the venture.

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Investing Directly as an LP or via Fund of Funds?

This article, penned by Igor Sill, a Managing Director of Geneva Venture Management, was originally penned in the uptick following the 2008 crisis when investor interest in Venture Capital again started taking stage amidst high-profile names such as LinkedIn, Facebook and Twitter. It seems apt to re-air Igor’s discussion of how investors can approach investing in private companies and early-stage companies in light of the recent explosion of online portals (of which ACE is one) and the re-imaging of direct investing in a fee-free model. Read More

Strategies for Small and Midsized Businesses Seeking Capital

This original version of this article  appeared in VC Experts, Private Equity and Venture Capital Articles. It was written by Christopher S. Connell of Stradley Ronon LLP. While the macroeconomic context has improved somewhat since it was penned, these deceptively simple tips remain extremely relevant in making sure your business can weather any financial storm. All small or medium sized business owners that are looking to access capital or ensure their business is on sound financial footing should take a quick look.

The financial crisis facing the United States is front-page news on a daily basis. Although the tone of the message has improved in recent weeks, we can’t escape the reminders of the financial pressures on all levels of our economy. Homeowners are experiencing decreased buying power due to the housing downturn, high unemployment and tightened credit standards. Local governments are dealing with budget cuts and lower tax revenues. Small-business owners, those who are most likely to stimulate the economy by growing their businesses and hiring more employees, are having difficulty obtaining the capital necessary to drive that growth.

But why is it that so many solid businesses can’t get their hands on the capital they so desperately need? And how should these businesses approach the current lending environment to enhance their chances of success? Let’s first take a look at some of the basic reasons the financial markets have tightened so much.

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Is your Private Company Really Managing For Shareholder Value?

In privately-held companies, realizing previously created equity value is often a secondary strategy until a succession planning, estate planning, or a business-ending liquidity event is under consideration. Cash, or other assets, must be distributed to your shareholders to “realize” shareholder value. In public companies, this is easy to accomplish: sell your stock in the market! This strategy is not available for privately-held companies–particularly family enterprises.

In fact, the topic of realizing shareholder value is seldom addressed. I know this from my experience as a family enterprise business consultant and prior board member of 14 such companies. The focus by such enterprises is always on creating shareholder value. The big disconnect is, until shareholder value is realized, any created value is just a paper gain; these are unrealized paper stock gains that can disappear in your investment portfolio like paper into a wastebasket.

The fundamental question CEOs and board members need to ask is “are you spending your most valuable resource — your senior executive team’s time — addressing issues that both create and realize equity returns to your shareholders?”  An understanding of the key levers that impact shareholder value is critical to developing the right business strategy, operational focus, and prioritization of work assignments among the senior management team. Any other focus results in suboptimal financial returns and increased investment risk for your shareholders.

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The Role of the Internet in Private Capital Markets

In this video ACE CEO Peter Williams questions Daniel Gorfine, the Milken Institute’s Director of Financial Markets Policy and Legal Counsel, on the new role of the internet in capital raising.

They cover:

  • The evolution of the internet and finance from discount brokerages in the ’90s to private capital raising portals today
  • How the different Titles of the JOBS Act are opening portals to enhance marketing,
  • Ultimate impact of the internet in capital raising, information, size of market, & liquidity
  • Impact of the internet on the institutional versus individual investor level
  • New regulatory concerns that could arise and potential lessons to be drawn from the ’90s

Additional Interviews with Daniel Gorfine


The Milken Institute’s mission is to improve lives around the world by advancing innovative economic and policy solutions that create jobs, widen access to capital and   enhance health.

 

 

5 Ways to Improve Your Private Equity Fund Manager Selection

When it comes to allocating your capital to private equity, like any other asset class, you’re looking for the best returns possible, which ultimately depend on fund manager selection. Choosing a guardian for your capital requires thorough due diligence to ensure minimal risk and the best chance of securing your expected level of return.

But how can you predict top performing private equity fund managers?

As the saying goes, past performance is not a guarantee of future performance but a private equity firm’s historical performance data is undoubtedly the most important place to start the due diligence process. If you look beyond headline performance numbers and dig into the underlying data, track record analysis can provide you with the questions you need to ask to evaluate the likelihood of future success.

Here are five of the most important areas of a track record you need to scrutinize as a potential investor

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Allocating Your Portfolio to Alternative Investments

Reports of how leading asset-allocators such as the Yale endowment have increased their returns while lowering risk has generated widespread investor interest in alternative asset classes. This should come as no surprise: the concept of achieving superior risk-reward combinations through diversification into different, uncorrelated asset classes certainly extends to adding private investments to one’s portfolio.

But understanding that alternative investments might benefit your portfolio is very different than actually investing in them. Even on the more macro/portfolio level thinking through exactly what percentage of your portfolio to allocate to alternative investment opportunities is a very complicated endeavor. Why?

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Asset Allocation into Alternatives

The appropriateness of alternative assets in an investment portfolio has been in the news a lot lately. The August 16-17th edition of the Wall Street Journal, alone, had two articles on the subject. One, Do Hedge Funds Belong in a 401(k)? by Jason Zweig presents arguments by experts who have differing views on the subject. The other, Is Your Portfolio Too Diversfied? by Walter Updegrave answers the title’s question by preaching moderation. That is, Updegrave counsels that although diversification is appropriate, taking it to an extreme can be counterproductive. Both articles are worth a read.

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Years After Lehman, Is the Financial System Safer?

I don’t really understand why there needs to be so much tension about this. The country is facing the worst economy since the Great Depression. If the financial system collapses, it will take every one of you down.

~ Ben Bernanke, Fall 2008

It’s been well over 5 years now since the most powerful bankers of the Western world, in the wood-paneled boardroom of the Federal Reserve Bank of New York in downtown Manhattan, convened to debate over the fate of Lehman Brothers. Henry Paulson, then the Head of the US Treasury, had called the meeting. Today, we all clearly remember what happened.

Barclays was interested in the takeover of Lehman. However, Hank Paulson was not willing to afford any kinds of financial guarantees and the British financial authorities did not allow Barclays to proceed without those guarantees. Monday, September 15th, 2008, came along and Lehman Brothers went into Chapter 11.

Soon after, the world’s financial system – and with it the global economy – went into a free fall. What followed – and continues to this day – was what will presumably go down in history as the greatest internationally concerted “rescue plan”, the biggest monetary and fiscal intervention of all times.

Today, years later, we find ourselves wondering if anything has been gained? Is the financial system any safer than it was before 2008? Or, is the system just as fragile and loaded with risk as it ever was?

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Family Offices and Investing in Private Securities

ACE Portal By ACE Portal Tue, Sep 23, 2014 Videos Connections

Peter Williams, ACE Founder and CEO, speaks with Angelo Robles, the CEO and Founder of the Family Office Association (FOA). This is a can’t miss interview for families interested in private securities and those interested in understanding how family offices look to source and diligence opportunities.

Specific topics include:

  • Challenges facing a Family Office interested in direct investing
  • Issues of maintaining family confidentiality versus increasing access to deals
  • Changes to access via fund structures or direct investing
  • Key talent areas needed inside of the family office for this asset class

For more from Angelo, see his interview on defining exactly what a family office is and how it works


 

The Family Office Association is a global membership community dedicated to providing UHNW families the resources to solve their most difficult challenges and achieve their respective and collective goals. Their strategic meetings and forums offer insight to grow wealth, strengthen legacy, and unite multiple generations through shared interests and passions.

The JOBS Act Two Years Later

In this video ACE CEO Peter Williams questions Daniel Gorfine, the Milken Institute’s Director of Financial Markets Policy and Legal Counsel, on what he has seen regarding the evolution and implementation of the JOBS Act over the last two years.

They cover:

  • Where things stand with regards to implementation of the JOBS Act
  • A survey of developments in each Title of the JOBS Act
  • Implementations of General Solicitation provisions
  • Potential regulatory changes that might change things moving forward

Additional Interviews with Daniel Gorfine

 


The Milken Institute’s mission is to improve lives around the world by advancing innovative economic and policy solutions that create jobs, widen access to capital and enhance health.

Fundraising for Emerging Growth Companies Post JOBS Act

ACE General Counsel, Jason Behrens, interviews Joe Bartlett, a Co-Founder of our partner VC Experts and Special Counsel to McCarter and English on the fundraising environment for Emerging Growth Companies following the passage of the JOBS Act.

In the video they first discuss nuances of the current legal environment with respect to IPOs relative to the entire JOBS Act. They then focus on whether the overall JOBS Act, which encourages companies to stay private longer, will have a greater impact than the IPO on-ramp provision found in Title 1 of the Act. Will the end result will be more IPOs or fewer?

The second half of the video focuses on the change to the maximum number of shareholders and the potential for secondary trading and new liquidity programs in this new environment as well as the role of registered (and unregistered) finders in the capital raising process.

For more video interviews with Joe see:

VC Experts provides powerful data on the financing of private companies, along with industry-leading content on fundraising. We conduct exhaustive analyses of all state and federal regulatory filings by private companies. Information gathered by VC Experts includes valuations, share prices, terms and conditions, board members, and behind the scenes details for improved deal context. We maintain an online library of 6,000 articles and more than 300 downloadable forms commonly used to construct private equity investment agreements. VC Experts has become an indispensable resource for entrepreneurs, investors, lawyers, and various services provides in the venture capital and private equity industries.

Transitioning from a Private to Public Company

ACE General Counsel Jason Behrens interviews David Garrity, a principal at GVA Research and a Managing Partner at Whitemarsh Capital. David and Jason spend this interview discussing David’s experience taking two companies public.

Their discussion is wide-ranging. Not only do they talk about the broad spectrum of why to go public and when relative to the passing of the JOBS Act and Sarbanes-Oxley, but they also drill down on key challenges in the process, what aspects of the CFO’s role changes, which stay the same, and questions around due diligence criteria for investors considering private companies.

This interview is not to be missed. You can also see David discuss Raising Capital in Today’s Markets.

For a related piece on the financial decisions facing a private company throughout it’s life cycle see https://aceportal.com/insights/the-financial-decisions-throughout-the-start-up-life-cycle/

Defining a Family Office: Common Traits & Key Differences

Peter Williams, ACE Founder and CEO, speaks with Angelo Robles, the CEO and Founder of the Family Office Association (FOA). Their discussion ranges across:

  • Defining a Family Office
  • Understanding what drives these offices
  • Navigating the myriad differences between families
  • Examining how FOA serves families and unlocks value for them and their service providers

For more from Angelo, see his other video on direct investing in private securities.


 

The Family Office Association is a global membership community dedicated to providing UHNW families the resources to solve their most difficult challenges and achieve their respective and collective goals. Their strategic meetings and forums offer insight to grow wealth, strengthen legacy, and unite multiple generations through shared interests and passions.

Joe Bartlett on the role of VC Experts and Private Market Data

Joe Bartlett, a Co-Founder of VC Experts, speaks with ACE General Counsel Jason Behrens on the company’s origins, mission, and importance. In particular he focuses on the role of comparable data in facilitating efficient market decisions and the unique niche VC Experts fills in providing that data.

For another video with Joe see his discussion on Fundraising post JOBS Act

VC Experts provides powerful data on the financing of private companies, along with industry-leading content on fundraising. We conduct exhaustive analyses of all state and federal regulatory filings by private companies. Information gathered by VC Experts includes valuations, share prices, terms and conditions, board members, and behind the scenes details for improved deal context. We maintain an online library of 6,000 articles and more than 300 downloadable forms commonly used to construct private equity investment agreements. VC Experts has become an indispensable resource for entrepreneurs, investors, lawyers, and various services provides in the venture capital and private equity industries.

Current Trends in Private Fund Capital Raising

Peter Williams, CEO and founder of ACE, and Joseph Smith, a Partner in the investment funds group at Schulte Roth & Zabel, discuss the current landscape around clients raising alternative funds. Topics of conversation include:

  • The amount of time it usually takes to complete the a capital raise for a private fund.
  • The priorities of limited partners.
  • The differences between large established funds and emerging managers trying to raise capital in today’s climate.

For a similar discussion as this video but focused on companies not funds see Raising Capital in Today’s Climate and Post JOBS Act Funding


Schulte Roth & Zabel LLP is a multidisciplinary firm with offices in New York, Washington, D.C. and London. As one of the leading law firms serving the financial services sector, SRZ regularly advises clients on investment management, corporate and transactional matters, as well as providing counsel on securities regulatory compliance, enforcement and investigative issues.

Efficient Capital Flows Necessary

Peter Williams, CEO and founder of ACE, interviews Daniel Gorfine, Director of Financial Markets Policy at the Milken Institute (www.milkeninstitute.org), on capital market efficiency. Among the topics of conversation, Peter and Daniel discuss why financial markets are important and why the efficient flow of capital is essential to maintain a prosperous economy. They also address how the private and public markets are different from a regulatory perspective and how efficiency can be increased in the private market by leveraging more technology.

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A New Asset Class: Start-ups & Early Stage Companies

What do Facebook, GoPro, Twitter, Walmart, Microsoft, Chipotle have in common?  All of these businesses are now publicly traded multi-billion dollar companies.  Before September of 2013, the first chance that 99.9% of investors would have had to invest in these companies would have been their IPO.

But everything you knew about investing completely changed in September 2013.  This is when the 80+ year old ban on General Solicitation for Private fundraising was lifted.  The Jumpstart Our Business Startups Act (JOBS Act) now allows entrepreneurs and business owners to raise capital to launch or grow their businesses online – without going public.  But, what does this actually mean?

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Digitally Savy Investors Means Digital Deals

Traditional Capital Raising is Old School

Traditional capital raising is an old school process. This means that succeeding in raising funds has typically depended on two criteria—a strong track record of success and/or a dense network of connections. Real world connections, whether professional or personal, help create the right meetings, draw the right attention, and get funds committed.

While the capital raising environment is in a transformative state (see below) it’s not all “out with the old.” A history of success and a well-developed network will always remain important.

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The Agent Choice for Private Companies

Whether you are a new entrepreneur or a seasoned executive, you are familiar with the challenge of allocating scarce resources. You make choices everyday based on perceived costs and benefits on where to invest your time and where to seek assistance. Accessing the private capital markets is no different. Thanks to new legislation under the JOBS Act, as well as some innovative technology, the private capital markets are opening up. This creates new choices for companies seeking to raise private capital through the advent of online fundraising platforms.

On one end of the spectrum lies the DIY model where companies are free to go it alone and directly control the capital raising process with potential investors. Professional intermediaries are cut out, which in theory should result in lower transaction costs. The argument goes something like this: “I only pay an agent to introduce me to investors, so thanks to the online platform, I don’t need them anymore”. Such may be the case if targeted investor introductions were the only value offered by a placement agent.

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Data Transparency Would Grow Private Markets

One of the biggest differences between investing in private companies versus public companies is the amount of information readily available. Publically traded equities have far more verified data available then private securities. The prevalence of this information together with the low-cost of obtaining it forms the very basis for the creation of efficient public markets because it facilitates comparing the risk/return profiles of different securities.

Agree or disagree with the market structure argument, few would dispute the micro-argument that without credible disclosure between company managers and prospective investors the efficient flow of capital would be impeded.[1] After all, most investors do not invest in something without knowing something about the opportunity. But for various reasons information flows within the private markets are often constrained. The end result can include more expensive capital for companies and a severely tilted information playing field for investors relative to management (or even relative to one another).

In order for the private capital markets to continue to become more liquid and more efficient (and thereby benefiting all involved parties) a standard for minimum acceptable information disclosure should be fostered.

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Talking Like An Angel Investor

This article, which first appeared in the VC Experts ‘Buzz Feed, features Joe Bartlett explaining some basic terminology on the VC and angel industry.

Considering an angel investment?

Before you take the plunge, learn to talk shop like a professional VC.

Angel investing is an increasingly common practice among high-net-worth individuals. But many would-be angels lack a true insider’s vocabulary – and the savvy that goes with it. Do you know the difference between a “burn rate” and a “burn out”? The pros do, and so should you if you’re looking to invest in a start-up. For a summary of “types” of angels see this post.

What then, in plain English, are all these venture capitalists talking about?

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ACE Portal enables accredited investors to proactively access private placements marketed by SEC-registered broker-dealers

ACE enables accredited investors to proactively access private placements

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Ace Portal

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ACE Surpasses $1 billion in Transaction Volume

In June 2014, ACE Portal successfully posted its 30th private placement of securities on its platform. To date, ACE has supported over $1 billion in targeted private issuances.

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ACE Registers 50th Bank

In May 2014, ACE Portal successfully registered its 50th placement agent on its platform. ACE works with investment banks on other placement agents to improve their private offering process.

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PricewaterhouseCoopers

Pricewaterhouse Cooper discusses the potential of ACE Portal as a complete private company platform The full article can be found HERE  

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Bloomberg Businessweek

Bloomberg reports on the NYSE and ACE Portal partnership. NYSE Euronext (NYX:US), the owner of the New York Stock Exchange, bought a minority stake in ACE Group Inc., which operates a platform for companies to sell stocks, bonds and other securities privately. ACE was founded in 2010 and runs a portal through which broker-dealers can […]

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First Private Offering

ACE Portal successfully began hosting private placements on its platform in the Spring of 2012

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Peter Williams

Peter Williams is responsible for providing strategic direction and overseeing the growth of the business. Peter was named to the 2013 Investment News Power 20 – the 20 individuals around the globe expected to have the greatest impact on the financial advisor community in the coming year. Peter has been a guest speaker on private […]

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Richard Pistilli

Mr. Pistilli is primarily responsible for business development. Mr. Pistilli joined the Company in 2012, after a successful career in investment banking with Citi, Bank of America, and CIBC World Markets. Throughout his investment banking career, Mr. Pistilli successfully raised over $11 billion in capital for a diverse group of companies, across multiple industries, through […]

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