Update on Georgia Crowdfunding

12 May

Much progress has been made in Georgia regarding “legal” intrastate crowdfunding since I first posted about this topic a little over a year ago. Below, I’ll give a quick update on how the market is growing regarding the use of the Invest Georgia Exemption.


- Platforms:

All of the below platforms allow “non-accredited” investors to invest using the Invest Georgia Exemption. Angel investors (Accredited investors) can also invest, but the primary market is directed towards non-accredited investors. (FYI-“interstate” investing, a la JOBS ACT, is not yet legal)

SparkMarket: equity. Atlanta based, IGE

Sterling Funder: equity, Atlanta based, IGE

Groundfloor: debt, North Carolina Based, operating in Georgia, Real estate focused, operating in GA and other states, IGE, Reg A

Crowdvested : equity, debt, real estate focused, Georgia-based properties, IGE

MarkerStaker equity, Atlanta-based, medical innovations, IGE


- Georgia Crowdfunding Community (Atlanta, 350+ members, meets once a month, free)



-Georgia Crowdfunding Investors (Atlanta, private, new, dues-paying, meets 1-2 a month, non-accredited members)



Augusta Crowdfunding Group (Augusta, GA, 30+ members)



Service Providers (lawyers that understand the Invest Georgia Exemption)


Stephen Wright, Taylor English

Dan Schmalo, 360 Law


State of Georgia Resources

Tom Zagorsky, Director, State Securities Division



“Understanding the Invest Georgia Exemption”, Tom Zagorsky

“Understanding the Invest Georgia Exemption” (Tom Zagorsky)



There are 367 “active” angel investors in Atlanta, Georgia.* Whaaaat??

2 Dec

Is this good or bad? True or not true?

For the sake of clarity, I consider an “active” angel to be one who is a “member” of an organized angel group (such as the Common Angels in Boston) and who is actively investing in angel deals in their community or through one of the new online platform such as AngelList.

FYI–I have tackled this subject of accredited households in a previous post, and have had a long standing interest in determining the “numbers” of active angel investors.


However, in my August post, I only used the GAO and SEC studies to determine the approximate number of accredited households in the US, not the actual number of “active” angel investors in the US.

Number of “active” angel investors in the US: 265,000.

Here is where the number 265,000 for active angels is derived–Last week, I read a recent presentation that the Angel Capital Association gave to the SEC at the November 21, 2013 SEC Forum on Small Business Capital Formation.  The Angel Capital Association is the preemminent angel investor trade organization in the United States and they are the sister organization to the Angel Resource Institute. They collaborate with Silicon Valley Bank on the Halo Report and they collaborate with the New Hampshire Center for Venture Research. I trust their numbers and their research.

SEC Presentation:


 SEC Agenda:


In the presentation (slide 8) the Angel Capital Association gives the number of accredited (“angel” investors) households on a national basis (8.7M—which is on the high end), the number of “active” angels (265,000), and the number of angel investors in formal angel groups in the United States (15,000). The 265,000 “active” angels represent approximately 3% of the overall population of the 8.7M “accredited” households. Interestingly, the above 3% also corresponds roughly with my previous post in which between 3% and 5% of the overall population are “accredited” households.

By coincidence, the Wall Street Journal published a story today about angel investing that uses similar numbers:

 “What You Need to Know to Become an Angel Investor”


Since I live in Atlanta, Georgia, we will use Atlanta as an example of these numbers and attempt to postulate how many accredited households are in the state of Georgia and in the city of Atlanta and how many of those accredited investors can be considered “active”.

- 2012 US Population of Accredited households: 8.7M

- 2012 Active Angel Investors: 265,000


- 2012 US Population: 315M


- 2012 Georgia Population: 9.9M


- 2012 Atlanta, Georgia population: 443,775


8.7M/315M = .0276 or 2.76% of the US population are accredited households

9.9M X .0276 = 273,240 accredited households in Georgia

273,240 X .03 = 7,541 “active” angel investors in Georgia

443,775 (Atlanta Pop) X .0276(% of accredited investors) X .03 (Active angels %) = 367

So there you have it. If you are a company looking to raise capital from accredited, “active” angels in the city of Atlanta, Georgia, you have 367 customers.

*I am not a researcher, nor a lawyer nor represent any angel group. I just like to keep up with this fascinating field. Please alert me if you believe my math above is incorrect or my conclusions in error.

How Many “Accredited Households” Exist in the U.S. ?

30 Aug

Many of you reading this blog know how to define an “accredited investor” (aka: angel investor)

Question is, how many “angel” investors really exist in the U.S.? It’s a question, and the answer, that has eluded me for years. However, with more attention focused on angel investing these days, numbers are now easier to come by.

There are published reports (Google, etc) that will give you a number, but I wanted to determine the information using sources I can find that are reliable. Often as well, these numbers will mix the terms of individual angel investors with the term of accredited households.

First,  let’s take a look at the July 2013 GAO report to the Securities and Exchange: “Alternative Criteria for Qualifying As An Accredited Investor Should Be Considered”.

This is a 69 page report by the U.S. Government Accountability Office generally recommending that the SEC add additional qualifications in 2014 to the “accredited Investor” criteria such as “liquid investments” and the “use of a registered advisor”. However, buried in the report are some wonderful facts related to the number of “accredited “households” that exist in the U.S.

To start:

On page 18/19, we see that the GAO uses the Survey of Consumer Finances to determine that there are 118,000,000 households in the U.S.

On pages 9/10, we see that SEC uses proprietary information (dated 2007 re: page 10) to determine the percentage number of households in the U.S. that are accredited.


1980: 1.7% (when accredited investor status first initiated)

2007: 9.0%

2010: 7.2% (after “primary residence” was removed from qualifying criteria)

However, the GAO uses information dated 2010 (page 10).


1980: not available

2007: 5.2%

2010: 2.8% (after “primary residence” was removed from qualifying criteria)

We can do a quick calculation using the SEC 2007 numbers and the GAO 2010 numbers to determine the estimated number of “accredited households” in the U.S..

SEC                                                 GAO

2007:  10,620,000                          2007: 6,136,000

2010:  8,496,000                            2010:  3,304,000

(statistical range +/- 15%)

So, from a 2010 high range using SEC numbers to a low range using GAO numbers, we can see that roughly 3, 300,000 and 8,500,000  accredited households exist in the U.S.

Surprised? So, how many exist in your state? Your town? And how many of these “accredited household” are active angel investors?  Those are my next posts….

The Funding Landscape Is Changing. Hustle, Or Get Left Behind.

12 Aug

The ability for private companies to raise capital from private sources has changed dramatically over the years. In the Atlanta, Georgia market, I generally observe local companies attempt  the now traditional route of  raising capital from personal funds or “friends and family” first, then angel investors, and finally, venture capital (if all goes well).

I think many local companies are missing how the landscape of capital raising is changing and are missing opportunities that other areas of the country are successfully using–or are ignoring unique opportunities within the State of Georgia. Here is a sample of how the landscape has changed or is changing….

20 years ago:

Personal funding

Friends and Family

Venture Capital

10 years ago:

Personal funding

Friends and Family

Angel Investors

Venture Capital

5 years ago:

Personal funding

Friends and Family

P2P debt lending

Angel Investors

Venture Capital

3 years ago:

Personal funding

Friends and Family

Donation/Contribution (Kickstarter, Indiegogo,etc)

P2P debt lending

Angel Investing

Venture Capital

Present Day

Personal funding

Friends and Family

Donation/Contribution(Kickstarter, Indiegogo)

P2P debt lending

Angel Investing

AngelList Syndicates

Kiva Zip

Venture Capital

1 year from now:

Personal funding

Friends and Family

Donation/Contribution (Kickstarter, Indiegogo,etc)

Invest Georgia Exemption (intrastate equity funding)

P2P lending

Angel Investing

AngelList Syndicates/Kiva Zip

Invest Georgia Program (Georgia state-based $100M Venture Fund)

Existing Venture Capital

I hear this phrase a lot around Georgia–“There is not enough capital to go around”. That’s old school thinking. Local, regional and national opportunities have increased dramatically in just the last few years. The capital is out there–you have to HUSTLE and think innovatively.

Get there first.

How Market Forces are Changing Traditional Angel Investing

8 Jul

Two recent news articles that caught my attention in the last few weeks have confirmed my personal opinion that angel investing has changed considerably from when I first became involved in this type of investing. Perhaps changed forever and perhaps changing faster than many are expecting. I have 15+ years of experience in angel investing—-I did my first angel investment in 1996 before it was called “angel” investing and am still making investments in private companies as well as local VC funds. I ran the Atlanta Technology Angels as Executive Director (and investing member) from 2002-2010 and BOD member 2002-2012, and served on the Board of Directors of the Angel Capital Association from 2007-2010. I am now a member of the AIM angel group, the co-Chair of the Georgia Venture Capital Coalition and the founder of the Georgia Crowdfunding Community.

The articles are I recently saw are here and here and below:



The first article  gives an example how angel groups are increasingly investing outside of their local geographic areas of influence and knowledge.  The second article shows a concern  that the SEC will, once again since 2010, change the criteria of an accredited investor.  Both of these issues have been seemingly sacrosanct in importance over the years that I have been involved in angel investing. “All angels invest locally where they can drive to inspect the company they are investing in.” and  “The definition of an accredited (angel) investor has largely been intact since 1933 and is unlikely to change.” Heard those, right? Yep, me to. I’ve even used those myself in the past.

Nothing changes–until one day, it does.

Along with the above articles, here is my thinking of  how the “traditional” model of angel investing is changing (or already has changed):

1.) JOBS Act

The SEC and FINRA quietly posted two notices last week during the 4th of July Holiday. Both government departments are moving forward on the JOBS Act rules and regulations. The next wave of  unaccredited “average joe angels” are coming–and they number in the millions.

2.) Intrastate Crowdfunding

Georgia and Kansas now have State Securities rules and regulations that allow private, for-profit companies in those respective states to raise capital through capital raises from unaccredited investors. Yes, this is state based crowdfunding and it is completely legal for both unaccredited and accredited investors. North Carolina has a bill in the NC General Assembly for legal instrastate crowdfunding in the current 2013 session–and it may pass. Other states are considering similar legislation or rules and regulations.

Georgia has a burgeoning “Invest Georgia Exemption” infrastruture” starting to build. The next 90 days in Georgia and North Carolina are going to be exciting.

3.) Battle for the “Accredited Investor”

I’ll go on record here and predict that there will soon be an epic battle nationwide for the market share of accredited investors. Why? The “No-Action” letters recently given to Second Market (who has a partnership with AngelList) and FundersClub. Both are clearly intending to be first movers, are well funded and are likely going to concentrate on marketing to accredited investors—across the nation. And, they will use the JOBS Act Title II–which will enable them to advertise to these investors legally and on all advertising mediums.  For example–If I am an accredited investor in Georgia-I will now be advertised to in a legal fashion to invest in private companies across the nation. Is an angel investor in Georgia going to take a chance on a Boston or New York or Silicon Valley company? You betcha. Will this reduce the amount of “local only” Georgia angel capital going into local Georgia businesses? Probably. Will those same local Georgia companies have access to a national angel audience? Yes.

4.) Syndication

Angel Group Syndication has been quietly going on for years. It is increasing in acceptance by most angel groups and is continuing to  grow in popularity. Here is a great example.  Why is this important? The ability to invest in companies outside of local geographic areas just wasn’t efficient 10 years ago. With the advent and growth of groups such as the Angel Capital Association and others, individual angels and angel groups across the nation are getting to know each other in a variety of ways and investing outside geographic areas of influence has become more accepted and efficient. Local investing only by local accredited angels is going the way of the Tasmanian devil.

Note to entreprenuers: Local angels are great, but remember to ask about syndicate partners.

5.) Changing criteria for definition of an accredited investor. (Above)

The SEC, in 2010, changed the definition of an “accredited” (angel)  investor by excluding the individual’s primary residence. This was the first time since 1982 that the SEC has reworked the accredited investor criteria. The SEC has the ability starting in July, 2014 to review the accredited investor criteria again and make changes without going back to Congress. Why is this important? Any increase in criteria is likely to substantially reduce the number of angel investors in the USA.

That’s enough for now. Don’t want too many darts thrown my way from my current and former angel investor brethren. However, I’d love your feedback.  Am I right? Wrong? Misguided? Looking for a fight?

See you in the market!

The Early Growth of the Georgia Crowdfunding Community

3 Jul

I have written previously on the current ability within Georgia to “crowdfund” Georgia-based companies by non-accredited Georgia investors here and here. If you are not yet aware of this new ability to help fund young Georgia startup companies, please do read the earlier articles

Let’s take a look at a few metrics below in the growth of our Georgia Crowdfunding Community I set up on MeetUp back in April. The intent of this Meetup group is to help form a Georgia-specific community revolving around the “Invest Georgia Exemption”(IGE). The IGE allows non-accredited investors (accredited investors, or “angel investors” already have the ability to invest in any private company) to invest in many young, private, Georgia based startups and allows Georgia-based companies to raise additional capital from a much larger segment of the Georgia population.

Here is a link to the Georgia Crowdfunding Community Meetup Group. Please join!


Georgia Crowdfunding Community Meetups to date:

April 17: 23 attendees
May 15: 150+ attendees

Future Scheduled Meetups:

July 30: Atlanta Tech Village
August 15: Atlanta Tech Village

Details on the upcoming July and August Meetups are on the Meetup site here.


April: 20 members
May: 50 members
June: 98 members (almost to 100!)

The Georgia Crowdfunding Community Meetup group is roughly doubling in membership every 30 days. In April when I first started the group, I was hoping for 100 members by end of June. We came close—96 members at the end of June!

I think this group needs to be MUCH MUCH LARGER. We need to set a new goal and try to hit 500 members by end of September!!

With the upcoming Meetups on July 30 (Atlanta Tech Village) and August 15 (ATDC), there will be a lot of activity in the market. To hit 500 members by September 30, we will all have to keep an eye out for those in the community who are interested in learning more about Georgia Crowdfunding and actively recruit them to this Meetup Group. Please push them to this group.

Can you imagine how much we can help build the crowdfunding community in Georgia if we have 500 members within 6 months? Wow.

I am continuing to work to help create a strong identity for the group and to establish priorities for this Meetup group to grow and flourish. Please let me know all of your thoughts, feedback and recommendations.

The Invest Georgia Fund

5 Jun

On April 29, 2013, Governor Nathan Deal signed into law House Bill 318 which enabled the creation of the Invest Georgia Fund.

The Invest Georgia Fund will be $100M in size and will be invested into Georgia companies over a five year period. Most likely, the Invest Georgia Fund will be funded in fiscal years 2104 – 2018.

The Invest Georgia fund will be a state-based investment fund that will, in turn, allocate capital to Georgia-based venture capital and private equity firms to invest in Georgia-based companies.

A seven person Invest Georgia board will be appointed by Governor Deal., Lt. Governor Cagle and House Speaker David Ralston to oversee the program and to help select an independent fund administrator which will be tasked with helping to select the Georgia-based investment firms.

The fund administrator  is expected to consist of experienced investment professionals and will be responsible for administering the Invest Georgia Fund and responsible for selecting a group of Georgia based venture capital and/or private equity funds in two categories, early stage venture capital funds and growth stage venture capital funds. 40% of the monies in the Invest Georgia Fund will be designated to the Georgia-based seed/early stage funds and 60% of the monies in the Invest Georgia Fund will be designated to the Georgia-based growth stage funds.

Congratulations to all involved!


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