Bob Sell Quoted in Forbes.com

The weekly Forbes.com column "Straight Up" addresses the issue of angel investing in the October 26 column entitled "Touched by an Angel."

Angels -- wealthy people who are usually entrepreneurs -- are typically the first level of outside investment in a company. They've been key for many great companies from Apple Computer to Intel to Amazon.Com. And, the good news is that it appears angels are writing more checks. In the first half of 2005, total angel investments were $11 billion, according to the Center for Venture Research at the University of New Hampshire. The center said 26,000 ventures received funding in the first half with 126,000 active investors. There are a lot of angels out there -- and a lot of startups looking for money. Among the tips when seeking an angel is to "Get Your House In Order."

"While hiring a qualified attorney is not cheap, it is critical. If your company has a shaky legal structure, you're likely to scare away angels. Many entrepreneurs mistakenly believe that the federal securities laws do not apply to their venture. The company is too small, right? Wrong. The federal securities laws apply to all financings."

"Bob Sell, an attorney with Seyfarth Shaw, recommends focusing on accredited investors. This is defined under the federal securities laws as a person with a net worth of at least $1 million or annual income of $200,000 ($300,000 if the person is married). "`It is important to obtain written confirmation of the status of the investors by way of a well-tailored subscription process,’" says Sell. "`It is also important to make disclosure of risks that could give rise to a future fraud claim.’"