Angel Investors

Naturally, an exempt Angel Investor is described in the picture above only if the investor does not take equity in exchange.  An individual can be an exempt angel investor by contribution, for which a non-market based return in the form of lower taxes is allowed.  An organization can be an Angel Investor by pooling funds, usually from individual angel investors, and then infusing capital into organizations in line with the investor’s charitable goals.   Here again, tax immunity is the permitted return.

If you are teaching exempt orgs this semester, here is a good story to stimulate a discussion about what constitutes a charitable purpose, private benefit, unrelated business income, program related investments, and even jeopardizing investments.  Here are excerpts from the article : 

Elemental Excelerator, a leading nonprofit climate tech investor, today announced it plans to infuse up to $43M into climate tech startups focused on social impact. On the heels of a chilly VC winter and the collapse of Silicon Valley Bank, Elemental is leaning into its position as one of the longest-standing climate technology investors to respond to market conditions and fill funding gaps to accelerate climate solutions with deep community impact.

To scale climate solutions more quickly, Elemental will increase its funding to $43 million across two initiatives. First, Elemental announced today it is accepting applications for Cohort 12 and will increase funding by $5 million for this cohort to a total of $13 million overall, with admission on a rolling basis. Second, this also marks a new offering for Elemental: an additional $30 million in catalytic project funding for three to six projects with a profound community impact, bringing the total across its cohort and this new catalytic funding to $43 million total.

“We need both speed and scale,” Elemental Excelerator Founder & CEO Dawn Lippert said. “In light of recent events, it is more critical than ever to scale up technologies like clean drinking water, wildfire reforestation and pollution reduction from trucks near ports. Elemental is building a robust pipeline of projects that will soon be ready for later-stage private investors and unprecedented federal funding opportunities.”

Elemental’s model involves investing in entrepreneurs and organizations committed to supporting people from traditionally excluded backgrounds and frontline communities. To date, Elemental Excelerator’s 150+ portfolio companies have customers in all 50 states, with 55% in low- and moderate-income communities.

And here is Elemental Excelerator’s charitable mission description:

In 2009, we launched a new non-profit model for funding climate tech deployment. Breaking down barriers to innovation alongside entrepreneurs provides us unique insight into the policy, market, and technology innovation needed to build systems to uplift people and communities around the world. Elemental has invested in over 150+ growth-stage companies and celebrated more than 25 exits, funded 115+ technology projects, and built a platform for scaling equitable, market-driven solutions to climate change.

Anyway, you gotta use every trick in the book to keep students these days from being sucked into the web portal vortex when they are sitting behind their laptops in class.  They expect to see examples and real life context, else they will be on ESPN or Amazon Prime, or something.

darryll jones