LSA Membership Benefits
LSA Membership Benefits
Our Deal Flow: We look at and participate in many promising new technologies and deals that will influence healthcare over the coming decade. We meet the scientists and entrepreneurs face-to-face. Our member-only online tools give you full access to look at the Entrepreneur Application, entrepreneur-uploaded materials, and member-only comments about the investments.
Get to Know Your Peers: Perhaps our primary benefit is getting to know and interact personally and professionally with our LSA community, comprised of 130+ angel investors, partners in academia and corporate incubators, venture capital firms, investment fellows, and more.
Share Due Diligence and Investment Savvy: Because we are sector-focused with core life science vertical segments, all members benefit from the work, education, and experience of fellow investors who participate in the due diligence and affairs of the company.
Access to Our Follow-On Investments: We commonly make follow-on investments in our companies. While valuations are typically higher, these companies have performed against projected milestones and show traction with investors, strategics, and customers. These are pre-vetted deals where some of our members have come to know the management and understand the market and product. Although fundraising may have to be allocated to prior LSA investors, there are often opportunities for other members to invest. Several recent deals have had attractive follow-on valuations, often because the company raised a smaller bridge or note round and has now achieved the milestones enabling a larger equity round.
Investment Management: We invest through an LLC, so there is one set of paperwork and one set of documents for the company. You receive a K-1 tax form each year for your investments, prepared by the LSA Finance team. Because of legal restrictions on the number of members of LLCs, we have to open a new LLC every few years, and are now using Life Science Angels IX, LLC.
Tax Planning: We do not provide tax advice, although we do have occasional presentations on investment strategy by members who are not tax professionals. The experiences of these members help to steer you in the right direction when you talk with your tax advisor. All angel investors would benefit from familiarity with their financial situation and may wish to discuss the following beneficial IRS codes with their tax advisor:
26 U.S. Code § 1045 - Rollover of gain from qualified small business stock to another qualified small business stock.
26 U.S. Code § 1202 - Partial exclusion for gain from certain small business stock.
26 U.S. Code §1244 - Losses on small business stock.
Investment Monitoring: A key to successful angel investing is staying in close touch with the company to provide advice and monitor progress. Every round of investment has unique characteristics, and results are better if an experienced investor with an investment in the company works with the management.
Investment Progress Reports: LSA does its best to have companies report regularly on their progress or lack of progress. The reports are emailed to members of those investments. One of the difficulties of angel investing is securing reports on the companies when the investment amount is small. LSA addresses this problem by having a larger pooled investment through the LLC and having the Executive Director and the deal lead(s) who maintain contact with company management, often as a company board member.