Capital Revolution: Venture Forward 2012

DiligentDeal and Gust held the Venture Forward 2012 Conference at the New York Academy of Sciences on June 20, 2012. With attendees ranging from individual angel investors to well-known entrepreneurs from across the country, it was a particularly exciting and informative event.

Designed to address the dramatic changes occurring in the financing of entrepreneurial ventures, panel topics covered funding dynamics, legislative issues and liquidity challenges. Although many attendees came from the perspective and background of more traditional tech-oriented investing, there was strong coverage of impact investing in discussions with members of Investors’ Circle and Echoing Green.

David S. Rose gave a visionary keynote speech, charting how in the period of just a few decades, funding dynamics had gone from the scale of $2MM per deal, down orders of magnitude to companies are being founded and reaching key milestones with only $2,000 of invested capital. It is this undeniable trend that is usurping the traditional mindset with regard to angel investing—now there are millions more potential angel investors with latent capital that can drive innovation and ideas forward. It’s unquestionable that this dynamic is going to benefit social entrepreneurs in accessing their first founding and early-stage growth capital—there will be more investors skilled in placing capital to greater aggregate benefit.

On the legislative side, a topic generating much attention was that of the JOBS bill and its positive effects in making it substantially easier for companies to raise capital, both through relaxed restrictions on Rule 506 offerings and through the new crowdfunding legislation. The jury is out still on exactly how much effect either of these will have as the SEC is currently developing regulations for both. Any initiative that eases the capital raising task for private companies has associated benefit to social enterprises—and the JOBS bill has disruptive potential in this regard.

The last major topic was that of liquidity challenges and how the IPO market may not really remain the main source of liquidity in the future for early-stage investors. Indeed, there was much talk of the early exit philosophy and efficient secondary markets offering value to founding and early-stage investors. These concepts are particularly relevant to impact investing, which has yet to generate much momentum and sustainability in the public equity markets across its diverse sectors.

In summary, an extremely informative day—insights provided into capital placement, legislation and liquidity alternatives were both in-depth and compelling and it is clear that impact investing is positioned excellently to benefit from the identified trends in angel investing.

What have you heard from experienced angel investors and their interest in impact investing?

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Photo: The Frank Peters Show