U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

28–742 PDF 2006

BRIDGING THE EQUITY GAP: EXAMINING THE

ACCESS TO CAPITAL FOR ENTREPRENEURS

ACT OF 2006

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

WASHINGTON, DC, MAY 10, 2006

Serial No. 109–52

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house

COMMITTEE ON SMALL BUSINESS 

DONALD A. MANZULLO, Illinois, Chairman 

ROSCOE BARTLETT, Maryland, Vice 

Chairman 

SUE KELLY, New York 

STEVE CHABOT, Ohio 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

JEB BRADLEY, New Hampshire 

STEVE KING, Iowa 

THADDEUS MCCOTTER, Michigan 

RIC KELLER, Florida 

TED POE, Texas 

MICHAEL SODREL, Indiana 

JEFF FORTENBERRY, Nebraska 

MICHAEL FITZPATRICK, Pennsylvania 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

NYDIA VELA ́ ZQUEZ, New York 

JUANITA MILLENDER-MCDONALD, 

California 

TOM UDALL, New Mexico 

DANIEL LIPINSKI, Illinois 

ENI FALEOMAVAEGA, American Samoa 

DONNA CHRISTENSEN, Virgin Islands 

DANNY DAVIS, Illinois 

ED CASE, Hawaii 

MADELEINE BORDALLO, Guam 

RAU ́ L GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

LINDA SA ́ NCHEZ, California 

JOHN BARROW, Georgia 

MELISSA BEAN, Illinois 

GWEN MOORE, Wisconsin 

J. MATTHEW SZYMANSKI, Chief of Staff 

PHIL ESKELAND, Deputy Chief of Staff/Policy Director 

MICHAEL DAY, Minority Staff Director

(II) 

C O N T E N T S 

WITNESSES

Page 

Pomeroy, The Honorable Earl (ND-At Large), Congressman, U.S. House of 

Representatives .................................................................................................... 3

Preston, Ms. Susan, Davis Wright Tremaine LLP ................................................ 4

Sobieski, Dr. Ian, Ph.D., Founder and Managing Director, Band of Angels ...... 6

Heinemann, The Honorable Lorrie Keating, Secretary, Wisconsin Department 

of Financial Institutions, Department of Financial Institutions ...................... 8

Loague, Mr. Dan, Executive Director, Capital Formation Institute .................... 10

Villalobos, Mr. Luis, Founder and Board Member of Tech Coast Angels ........... 12

APPENDIX

Opening statements: 

Manzullo, Hon. Donald A. ................................................................................ 28

Velazquez, Hon. Nydia ..................................................................................... 29

Prepared statements: 

Pomeroy, The Honorable Earl (ND-At Large), Congressman, U.S. House 

of Representatives ......................................................................................... 31

Preston, Ms. Susan, Davis Wright Tremaine LLP ........................................ 33

Sobieski, Dr. Ian, Ph.D., Founder and Managing Director, Band of Angels ................................................................................................................. 41

Heinemann, The Honorable Lorrie Keating, Secretary, Wisconsin Department of Financial Institutions, Department of Financial Institutions ..... 46

Loague, Mr. Dan, Executive Director, Capital Formation Institute ............ 48

Villalobos, Mr. Luis, Founder and Board Member of Tech Coast Angels .... 51

Additional material: 

Sohl, Mr. Jeffrey E., Ph.D., Professor of Entrepreneurship and Decision 

Services, Whittenmore School of Business, University of New Hampshire ............................................................................................................... 59

(III) 

(1)

BRIDGING THE EQUITY GAP: EXAMINING THE 

ACCESS TO CAPITAL FOR ENTREPRENEURS 

ACT OF 2006

WEDNESDAY, MAY 10, 2006

HOUSE OF REPRESENTATIVES

COMMITTEE ON SMALL BUSINESS

Washington, DC 

The Committee met, pursuant to call, at 2:13 p.m., inRoom 2360, 

Rayburn House Office Building, Hon. Donald A. Manzullo [Chairman of the Committee] Presiding. 

Present: Representatives Manzullo, Kelly, Chabot, Akin, Poe, 

Velazquez, Udall, Christensen, Barrow and Moore. 

The CHAIRMAN. Good afternoon, and welcome to this important 

hearing. 

On April 26, 2006, I introduced H.R. 5198, the Access to Capital 

for Entrepreneurs Act of 2006, or the ACE Act, with Representative Earl Pomeroy, our colleague from North Dakota. This bipartisan measure provides a mechanism for our nation’s small businesses to obtain critical equity funding. It does so by establishing 

a tax credit for the individuals and partnerships most likely to provide equity funding to small early stage companies. The purpose of 

this hearing is to examine and discuss the angel investor market 

and its potential effects on small businesses through the implementation of the ACE Act. 

This Act was patterned after successful programs in 21 States, 

11 of which have representation on this Committee. These States 

include: Arizona, Colorado, Hawaii, Indiana, Iowa, Maine, Michigan, Missouri, New York, Ohio, and Wisconsin. 

Where is Illinois? 

These State tax credits have materially helped increase the 

amount of early and emerging company financing being provided to 

our Nation’s small businesses. Today, a government official from 

Wisconsin is going to provide information on how the Wisconsin 

State tax incentive is working. 

The ACE Act provides a needed boost to our nation’s qualified 

small businesses by helping angel investors increase equity stakes 

in these companies. If the provisions of the ACE Act were signed 

into law, many small businesses which would otherwise fail for 

lack of adequate resources could grow and expand, creating more 

jobs for Americans. The United Kingdom already has a similar tax 

program in place that encourages new investments in emerging 

and early stage companies. The UK’s incentive has proved extremely popular and resulted in the influx of tremendous amounts 

2

of capital. We want to provide the same type of incentive to the 

growing and emerging small businesses in our own Nation. 

I now yield to the ranking minority member, Representative 

Velazquez of New York, for her opening comments. 

[Chairman Manzullo’s opening statement may be found in the 

appendix.] 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Access to capital is the key to success for many small businesses, 

but in today’s economy this is easier said than done. Many entrepreneurs need all the help they can get in securing the capital 

needed to start and run their businesses. Venture capital has long 

filled this role by putting seed capital directly into the hands of 

small business start-ups. Unfortunately, this source of financing is 

simply not accessible to many entrepreneurs starting out today, 

particularly women and minorities. 

This is why initiatives such as the Small Business Investment 

Company, SBIC, are so important in filling this gap. This program 

has a proven record, making an average investment per business 

of around $1.1 million, serving as a critical source of capital for 

early stage businesses. Now that the SBIC participating securities 

program has been shut down for over a year, with no plans for reopening, the need for such a government initiative has become 

more important than ever. 

As we will hear today, angel investors are working to fill this 

role. A lesser known and less formal alternative to traditional venture capital, angel investing is truly the wave of the future for 

thousands of small business start-ups across the country. Last year 

alone, there were 225,000 active angel investors in the U.S. who invested $23 billion in small businesses by focusing directly on early 

stage and growing entrepreneurial ventures that have faced difficulty in securing equity financing. 

This is the avenue for getting much-needed capital into the 

hands of our Nation’s small businesses. These entrepreneurs are 

some of the most innovative out there, and these are the types of 

high-risk, high-reward investments that will pay off in the long 

run. The question is: How do we make angel investing a valuable 

source of financing for this Nation’s entrepreneurs? 

Clearly, the obvious first step is providing tax credit incentives 

for angel investments in qualified small businesses. Investment tax 

credits for equity funding provides a good incentive to spur this investment in small firms. 

This is an important step in nurturing local companies with increased early-stage financing, but on its own tax credits are simply 

not enough. We need to make sure that the SBA is involved in this 

process. As the only agency tasked with assisting this Nation’s entrepreneurs, it is the SBA that truly understands the challenges 

small businesses face, has experience in helping business owners, 

and knows the importance of involvement at the local level. 

This bill and support system will provide both small businesses 

and investors alike with good, reliable advice, a system that will 

go a long way in spreading angel investment to companies across 

the country. 

We also need to commit more to assist women and minorityowned businesses, sectors that have traditionally faced difficulty in 

3

accessing equity financing. These companies have the potential to 

infuse innovative new ideas into the economy, which makes angel 

financing a good investment. It is clear that they need these investments as well, and angel funding must be a valuable source of financing for the next generation of women and minority entrepreneurs. 

Clearly, angel financing is of vital importance to small businesses. As the economy continues to rely on entrepreneurs to spur 

job growth and stimulate economic development, the need for such 

an initiative only grows. In that respect, we need to consider a variety of proposals in an effort to provide the best investment for our 

Nation’s businesses and the future of our economy. 

Thank you, Mr. Chairman. 

[Ranking Member Velazquez’s opening statement may be found 

in the appendix.] 

The CHAIRMAN. Thank you. 

The rules are that you limit your testimony to 5 minutes. Your 

complete written statements will be made a part of the record. We 

will keep open the record for 2 weeks for anybody that wants to 

add additional testimony. It is limited to two typewritten pages, 

and the smallest type print is 10 point, okay? No books or anything 

like that appended at the taxpayers’ expense. 

When you see the yellow light, that means that you have one 

minute. When you see the red light, that means wrap up in a 

hurry. 

The CHAIRMAN. We are going to lead off with a last-minute addition. My cosponsor of the bill is Earl Pomeroy from North Dakota; 

and, Earl, as soon as you feel comfortable—obviously, you can leave 

the panel to get back to your congressional duties—but we look forward to your testimony and statement. 

STATEMENT OF THE HONORABLE EARL POMEROY (ND-AT 

LARGE), U.S. HOUSE OF REPRESENTATIVES 

Mr. POMEROY. Thank you, Mr. Chairman. 

The opening statements of you and the ranking member reflect 

once again the Small Business Committee is one place where often 

we see some rare but wonderful glimpses of bipartisanship as Republicans and Democrats across the aisle try to answer the real 

problems facing growing our economy. 

Certainly in the small business area, Congresswoman Velazquez 

has it exactly right: Access to capital continues to be and will always be one of the most significant hurdles in growing and developing new opportunities through the small business sector. 

It has come to my attention that the opportunity to seek equity 

funding, especially from venture capital funds, has diminished as 

these funds have gravitated towards larger, more established businesses, driven by a number of factors, including the higher risk of 

the smaller, newer start-ups. 

I look at the ACE Act, the investment tax credit copied after 

State initiatives which have long been in place in this area. North 

Dakota’s effort, for example, was initially passed in 1989 and has 

been extended and improved several times. That is the value we 

believe this has back home, is a model that I think will help incent 

capital in this way; and it will, in my opinion, offer a balance to 

4

the higher-risk premium that capital is going to take as they go 

down to this level of what is known as angel investing. 

We have at the University of North Dakota the Center For Innovation, led by Bruce Gjovig. He was instrumentally involved in the 

creation of this legislation. 

I do commend you, Mr. Chairman, for the vetting that this proposal has had in terms of trying to make certain that we have developed a proposal that wasn’t just good in spirit but that actually 

works; again, has been closely copied by that which has already 

been marketed and tested at the State level. Those of us with experience in local and State government truly do believe that that is 

where the laboratories of innovation for our country are. In my 

opinion, the lab results are in. It is time now to federally move to 

an even greater incentive that the Federal Tax Code could represent and offer the ACE Act. 

These comments are extended on in my testimony, but the real 

experts are with us, so I want to keep my remarks short and move 

to the other panel members, Mr. Chairman. I would be happy to 

take any questions before I have to leave to get back to my other 

Committee, but I do want to thank my fellow panel members for 

their leadership in this area and helping us understand the critical 

role of angel capital. 

The CHAIRMAN. The Chair thanks the gentleman from North Dakota very much. We appreciate your testimony. 

[Congressman Pomeroy’s testimony may be found in the appendix.] 

The CHAIRMAN. Our next witness is Susan Preston. She comes 

all the way from Seattle, Washington. A microbiologist by trade 

and also an attorney. We look forward to your testimony. 

STATEMENT OF SUSAN PRESTON, DAVIS WRIGHT TREMAINE 

LLP 

Ms. PRESTON. Thank you very much. 

Chairman Manzullo, Ranking Member Velazquez, and members 

of the Committee, thank you for inviting me here today to testify 

before this Committee on bridging the equity gap and examining 

the Access to Capital for Entrepreneurs Act, or ACE Act. 

I am testifying before you as an expert in the field of angel financing and the funding gap and, in fact, testified before this Committee in April of 2005 as such an expert with regard to SBA’s 

defunding of the SBIC program. 

Just to remind you and give you context to my testimony and 

highlight my background, I am considered a national and international expert on angel and private equity financing. I have lectured, conducted workshops, written articles, white papers, consulted with various government and NGO organizations on the 

topic in close to 100 different settings to date. 

I am the founder of an angel organization in Seattle called Seraph Capital Forum, the first all-women’s angel organization in the 

United States. 

I have a well-written and well-received book on angel organizations that is being used in a number of different locations nationally and internationally on establishing angel organizations; and I 

5

am currently writing a book, an entrepreneurship guide to angel financing, under contract with Wiley Publishing. 

I am also a founding member of Angel Capital Association and 

a continuing board member for the successor Angel Capital Education Foundation. 

I am an entrepreneur-in-residence with the Kauffman Foundation and have been, for the last 6 years, focusing my attention entirely on angel financing. I am one of four lead instructors for the 

Power of Angel investing program that Kauffman puts on. 

About 6 months ago, I approached staff on the House Committee 

with the idea of an income tax credit for private equity financing, 

in part as a response to the chairman’s request for ideas to fill the 

ever-expanding fund gap, which had been partially filled by the 

now defunded SBIC program. Over these months, I have worked 

with staff on my own time as an individual citizen to develop what 

is now currently the ACE Act. 

Considerable work went through and into the development of 

ACE, including the establishment of a working group of experts in 

private equity financing and representation from national organizations, as well as representation from the States that currently have 

income tax credits, a total of 21 States. 

The roundtable discussions with this working group were highly 

informative and valuable in defining many critical structure aspects for ACE. ACE now represents what we consider the best of 

State programs and benefits from the lessons learned by these 

States in development and implementation of their own programs. 

The result is a considerable effort in time and thought-out program 

into the ACE Act. 

It is simplistic, self-executing; and that is part of the beauty of 

it as a Federal income tax credit for early stage investors. It represents and gives opportunities both to individual angels as well as 

to partnerships or angel funds, and it also provides that well-needed—as the chairman and ranking member have pointed out, that 

well-needed fund for those young companies and growing companies in that area. 

The initial responses from the angel community have been extremely enthusiastic for the bill as it targets exactly where their 

interests are in several aspects. As mentioned and as has been put 

into the record, this is a very important aspect of funding, between 

the friends and family round of small amounts for companies just 

starting and the venture capital rounds. 

Venture capital is, on average, an investment of $6 million to $7 

million per deal, far above what a young company needs from the 

standpoint of early investing. Therefore, with only 3.3 percent of 

venture dollars going into seed and early stage, we clearly need another area of investment. Angels fill that and have been filling that 

to a certain extent with 55 percent of their $23.1 billion going into 

seed and early stage. In fact, they invested in nearly 50,000 deals 

in 2005, which is an average of a little under $.5 million per deal, 

a very good and interesting spot for funding for these early stage 

companies. 

Moreover, angels are being asked to invest in second and third 

rounds of financing because of the absence of VC funding and also 

the lack of need sometimes of entrepreneurs for large-scale VC 

6

funding. Therefore, again, angel investors provide that critical and 

essential part of a healthy economy. 

The attributes of this bill are, I think, self-evident in its independence, allowing lone-ranger angels to invest rather than 

through angel funds and providing both for the individual angel as 

well as for the angel groups. It allows the angels to remain anonymous. It allows for some reduction of risk at a high-risk investment 

time period for them and allows them to choose their own investment at their own time period, as angels prefer to do. 

It addresses these critical attributes, and I believe that it is a 

well-defined and well-structured tax credit providing those needed 

incentives to angel investing. 

Thank you. 

The CHAIRMAN. Thank you. I like this jargon. Lone-ranger angels. It is interesting. 

[Ms. Preston’s testimony may be found in the appendix.] 

The CHAIRMAN. Our next witness, Dr. Ian Sobieski, is an aeronautical engineer and founder and managing director of Band of 

Angels, which sounds like a motorcycle club, in Menlo Park, California. And I notice that you graduated from Virginia Tech with a 

double major in aerospace engineering and philosophy. That is a 

good mix. 

Mr. SOBIESKI. Well, thanks. 

The CHAIRMAN. Good mix. We look forward to your testimony. 

STATEMENT OF IAN SOBIESKI, PH.D., BAND OF ANGELS 

Mr. SOBIESKI. Thank you, sir. 

Chairman Manzullo, Ranking Member Velazquez, members of 

the Committee, it is a pleasure to be with you here today. As you 

said in your kind introduction, I come from neighboring Virginia, 

and it is nice to be back in my old neck of the woods once again. 

Since 1997, I have been privileged to help run an organization 

called Band of Angels in Silicon Valley, California. This organization of angel investors, like many, is made up of SEC-accredited investors who have an interest in investing their time and their 

money in new young start-ups. 

What sets the Band apart is that an additional requirement for 

membership in our organization is that the angel has to have actually been an entrepreneur or a senior officer in a high-technology 

company. So members of our organization include the founders of 

Logitech, Symantec, National Semiconductor, the former CEO of 

Hewlett-Packard, the former CFO of Intuit, the former VP of Marketing for Intel, and a slew of other C-level executives from important companies that are less well-known than these. 

These are people whose average age is in their late 50s; and they 

have reached a point in their lives where, as I like to say, they 

want to stay in the game but not stay up till 2 a.m. Any more. As 

important as their capital is to the company, what is more than important to many of these entrepreneurs is the mentorship they provide, the guidance on how to build their business, as they did early 

in their careers, from nothing to something. 

Since its inception in 1994, the Band has invested in more than 

180 start-up companies. Of those, nine ended up going public; and 

that is quite a feat. We are talking about nine companies that we 

7

seeded with the first money eventually going public on the 

NASDAQ. Thirty-three more were acquired for a profit to the investors and, of course, to the founders. And it is worth noting that 

60 have failed, completely bankrupt, for a complete loss. 

But win, lose, or draw, every company that the Band seeded allowed an innovation to occur, allowed jobs to be created, and allowed an entrepreneur to pursue his dream. In total, we estimate 

something like 3,500 jobs have been created by companies that 

were seeded by the Band of Angels; and this story is copied over 

and over again across the country, both in formalized angel groups, 

in small networks of angels, and individual angels acting on their 

own. 

It has been mentioned here before and it seems to be an accepted 

fact that venture capital can’t service the entrepreneurial marketplace, and it really is the case that venture capital gets far too 

much credit as the font of innovation in this country. It is the latest development in the financial food chain, the financial structure 

that has been developing over the entire history of this country to 

more cleverly and efficiently deploy capital earlier and earlier in 

the whole life cycle of a company. 

But venture capital, as Sue just mentioned, is really structured 

to deploy several million dollars per company. The partnerships are 

limited to 10-year lives. Their entire structure requires liquidity in 

that period of time and needs the kind of return multiple that 

many companies simply are never going to produce, companies that 

are still valuable both to society and to the entrepreneurs. This is 

where angels have always fit in. They have always provided that 

critical capital to these companies. 

So that is where these bills that we are considering here today 

could play such an important value. If you imagine the life-cycle of 

all the companies in the marketplace as a funnel, with the biggest 

end of the funnel being the seed stage, narrowing down to the 

Googles of the world, those very few exceptional companies that 

change the entire order of magnitude of things, angels play at that 

seed stage. 

Currently, there simply is not enough capital and not enough resources to supply the constellation of companies that can and 

would provide innovation. The tax credits that we are considering 

here today would essentially add fuel to the furnace of innovation. 

You know, if you have gasoline in a tank, you can heat it very hot 

and it won’t catch fire. What you need is oxygen. What we are talking about here is increasing the flow of oxygen to a part of the food 

chain that is deprived of enough to create as much innovation as 

we would like. 

If we do this, I am not saying that all these companies will be 

successful. All of them won’t necessarily be the next Google. In fact, 

there might be more money losers. But the bottom line is: Win, 

lose, or draw, these kinds of tax credits will create more start-up 

companies. More failures but more successes. Which ones? We don’t 

know. But if you pass a version of this kind of proposal, I’m confident that I can guarantee that you will help create another 

Google, another Apple, another Microsoft, another Sysco. 

Thank you very much. We look forward to your questions. 

The CHAIRMAN. Thank you. 

8

[Dr. Sobieski’s testimony may be found in the appendix.] 

The CHAIRMAN. Our next witness is from Wisconsin, and Congresswoman Moore will be introducing her. But, before that, the 

witness has already forgiven me for attending Marquette University. A little bit of a rivalry there between the University of Wisconsin and Marquette University. 

Ms. Moore. 

Ms. MOORE. Well, thank you so much, Mr. Chair, for this privilege—although I am a Marquette grad—for this privilege to introduce a native daughter of Wisconsin. We are so proud of our Secretary of Financial Institutions in Wisconsin. 

She has really been doing this—she is an expert and has been 

doing this for a long time. She has over 18 years experience in the 

banking and securities industry in Wisconsin and has done a variety of things, including helping municipalities and municipal treasurers with their mutual funds and managing corporate accounts. 

Prior to having been appointed as Secretary of Financial Institutions, she was the adviser to Virchow Krause, which is the third 

largest accounting firm in the United States, to ensure their compliance with ERISA. 

She is a scrapper. She was born in central Wisconsin, Thorp, 

where she was the youngest of 12 kids. So that is a story of survival. 

She does it all well. She is married to Jack; and she has four 

daughters, Catherine, Sarah, Margaret, and Alexandra. So I know 

that that is a challenge keeping up with her jewelry and her perfume. I know the story, trust me. 

She is very active in a variety of non-profit organizations Statewide, a very responsible and well-balanced citizen; and it is with 

such great pride that I introduce Secretary Lorrie Keating 

Heinemann. 

Welcome. 

The CHAIRMAN. Sounds like a nomination speech. 

STATEMENT OF SECRETARY LORRIE KEATING HEINEMANN, 

WISCONSIN DEPARTMENT OF FINANCIAL INSTITUTIONS, DEPARTMENT OF FINANCIAL INSTITUTIONS 

Ms. HEINEMANN. Well, thank you. I have got to tell you, I was 

not expecting that. I am very honored, Congresswoman Moore. 

As many of you know, Congresswoman Moore was the author 

and one of the main instigators of Act 255, which is our tax credit 

package in the State of Wisconsin, and I am here to talk today a 

little bit about the success of that program that she put into place 

and what we have achieved. So certainly thank you, Mr. Chairman, 

for the opportunity here to testify. 

The Department of Financial Institutions, many people probably 

may not have heard of that. But what we do is we primarily regulate banking, security, credit unions; and then we are also the corporate filing agent for about a quarter of a million corporations in 

the State of Wisconsin. However, under Governor Jim Doyle’s Grow 

Wisconsin Plan, he also indicated he wanted us to focus on economic development; and this is my role as the Department of Financial Institutions Secretary, is working with the other departments throughout the State. 

9

In 2003, Wisconsin Act 255 was put into place. It is a 25 percent 

tax credit for angel investors and seed funds, also for their investments in qualified new business ventures in the State of Wisconsin. 

It went into effect January 1st of 2005. Since that time, we have 

achieved significant results. There were $3 million of total angel 

tax credits available in 2005. All of the credits were used. Over 290 

individual angel investors participated. Over 40 companies were 

funded. The total amount of measurable angel investing was $19.5 

million. 

By measurable, I mean we actually have the company names, the 

investors, and we have avoided duplication. But we do believe that 

the total angel investing, which is more through the data that we 

got through our attorneys, is about $50 million in the State. So it 

is a very, very important function of growing businesses in the 

State of Wisconsin. 

I had the honor to help cofound a Statewide angel network called 

the Wisconsin Angel Network; and we provide education, networking, and deal flow to the angel networks in the State. 

I have to take just a moment to thank Sue Preston. She did come 

into the State of Wisconsin a couple of years ago, when Act 255 

was just going into play; and we were able to significantly increase 

the amount of organized angel networks in our State. We had six 

at that time. We now have 15. Again, very important to bring and 

partner with Kauffman Foundation in educating and making sure 

that the angels in our State are very comfortable with the process. 

Just to give you a couple of examples. eMetagen Corporation is 

a company that was funded by the Golden Angels Network, and 

this was as a result of Act 255. They did take advantage of that 

credit. Up to 10 jobs will be created over the next 12 months. It 

is a very high-tech company that was seeded actually with the Wisconsin Alumni Research Foundation, which is at UW Madison. 

Also, another company you may be interested in that was just funded, Mithridion, a $1.6 million angel round, is currently in the 

process of establishing its lab at the University of Wisconsin Research Park. 

So if I were you, in your position, I would say, well, why is a tax 

credit package good for government economic policy? Well, first, I 

think it encourages the private sector to invest in the American 

economy. Second, I think it provides an increased availability of 

capital, that access to capital that Ms. Velazquez was talking 

about; and it attracts high-tech, high-growth entrepreneurial companies because this is what angel investors invest in. 

Yesterday, I had the honor of joining the Phenomenal Angels, 

which is a new fund that just announced yesterday they have 

raised several million dollars and they are focusing on investing in 

women and minority-owned businesses in the State of Wisconsin. 

So we are thrilled to have them on board. 

Finally, it puts a positive focus on our economy. As many of you 

know, the U.S. is a leader in angel and venture investing; and this 

tax credit package I believe is a win-win proposal. It leverages private investments at a very low cost to the government. 

So, again, thank you for the opportunity to testify in support of 

H.R. 5198. 

[Ms. Heinemann’s testimony may be found in the appendix.] 

10

The CHAIRMAN. Our next witness, is it Loague? 

Mr. LOAGUE. Loague. That is correct. 

The CHAIRMAN. Dan Loague is from Reston, Virginia. Mr. Loague 

is Executive Director of Capital Formation Institute. He has a very 

interesting background, working in China; and I notice that you 

worked on electronic reconnaissance systems on the RF4C Mach 2 

aircraft in your tenure in the Air Force. 

Mr. LOAGUE. That is right. 

The CHAIRMAN. It is just fascinating to see the educational backgrounds of the folks here. I am delighted that there are no economists, because a band of ill-advised economists just raised the interest rate again for the 16th time. Here we are trying to create 

more capital, and those clowns are out there making capital harder 

to get. 

They believe that if they decrease the money supply, people will 

buy less fuel, because it is petroleum that is causing the bit of increase in inflation. The problem is that people are charging fuel on 

their credit cards because they do not have enough money to pay 

it at the gas stations, and they are just increasing the amount of 

inflation themselves. 

So I just love to be around real people and not have the economists come in here and tell us how to run our world. 

Mr. Loague, we look forward to your testimony. 

STATEMENT OF DAN LOAGUE, CAPITAL FORMATION 

INSTITUTE 

Mr. LOAGUE. Thank you very much, Chairman Manzullo, and my 

thanks also to Representative Pomeroy and Ranking Member 

Velazquez. Thanks for holding this hearing today. 

The Access to Capital for Entrepreneurs Act of 2006 is an exciting opportunity to expand seed-stage capital for start-up and growing U.S. companies. This is a remarkable piece of legislation. It is 

an impeccable match with the practices of angels and seed-stage 

fund investors; and it also targets seed capital, the most important 

and continuously unfulfilled need of start-up companies. 

Let me talk a little about Capital Formation Institute and the 

National Association of Seed and Venture Funds. I am now the Executive Director of the Capital Formation Institute, formerly Executive Director of NASVF. 

CFI is an independent 501(c)(3) spin-off of the NASVF. The 

NASVF, I think, after working some dozen or so years with seed 

and early-stage investors, is now the largest network of seed stage 

and technology investment professionals. 

Now, both these organizations are concerned with expanding capital for start-up in high-growth companies. But, unfortunately, outside of these organizations, when you get beyond these organizations, the whole business, this part of the market, is under the 

radar and largely unknown. I get up in the morning and I think 

to myself, this is old stuff. But when you start talking to people, 

they are just simply not aware of it. They do not know what it is, 

and it is significant. 

Dr. Jeffrey Sohl, the Director of the Center for Venture Research 

at the University of New Hampshire, the leading researcher in this 

area, who has done research for years now, has said that, year 

11

after year, since the ’90s, that the angel investing market component has either exceeded or matched all of the combined VC investments in seed-stage companies. And more importantly than that, 

whereas you will see the VC companies investing in a few hundred 

start-ups, the angels will invest in tens of thousands and, as Sue 

has said, up to 50,000 companies per year. This is the driver of an 

innovative economy, and it is the heart of our competitive economy. 

When I was with the NASVF, I did about 100 events that were 

invitation only, which means I had to research who were the best 

people to come to participate in a peer-to-peer environment. So over 

about 9 years I got to know some of the really, really great people 

in this area, and a lot of them are seated at the table right now. 

I am happy to see them again. 

So when I heard about the Committee hearing last week, I contacted eight people around the country and asked them what they 

thought would be the effect of the Act’s passage, and I hope I can 

get through all eight here, but I will go ahead and try. 

The first person I talked to was a gentleman by the name of 

Steve Mercil, with RAIN Source Capital in St. Paul, Minnesota. 

RAIN Source is a multistate network of angel investors. It is an incredible operation, and Lorrie is familiar with that. 

What Steve told me was that the benefits—and here I am kind 

of summarizing, but I don’t want to get into the details—the benefits of the Act are beyond the tax credit. It raises the importance 

of investing in entrepreneurs. With the Act, we expect a 50 percent 

higher number of investors in our funds and 50 percent more dollars in our angel investment pools; and, more importantly, raising 

the funds will be quicker. The tax credit could be the last little 

push needed. 

Then I went to Burt Chojnowski, with Brain Belt Consulting in 

Fairfield, Iowa. Burt’s part of a rural miracle in Fairfield, Iowa. 

That is a wonderful town. You ought to check that one out. He is 

an active proponent of enterprise development in rural areas; and 

he said, quote,′′This is fantastic. It parallels what the Iowa Capital 

Investment Board has done with State tax credits and would be a 

real boon for angels and a community seed fund.′′

Orlan Johnson, with the Tri-State Investment Group in Research 

Triangle Park, North Carolina—TIG it is called—is one of the most 

successful angel groups in the U.S. besides the Tech Coast Angels. 

And he said, ′′It sounds similar to the North Carolina situation, 

which I would say works, but I am biased because I participate in 

the credits. There is a significant leverage generated for the State 

for this kind of tax credit program. It has been a factor in getting 

people that may not have taken the risk into the early-stage game. 

At 25 percent, it is substantial enough to get wealthy individuals 

to at least take a look at this investment class as an option for 

their portfolio.′′

Woodrow Maggard, with UB-STOR in Amherst, New York, is 

building the New York tech-based economy and says, ′′It would facilitate stronger angel networks and help bridge deals that now 

flow into early-stage capital.′′

Liz Marchi at Montana West Economic Development in Kalispel, 

Montana. Thanks to Ms. Marchi, Kalispel now has an angel group; 

and she says, ′′You know, we need to be driving innovation capital 

12

in all parts of the country, and our group believes this is a way 

that the private sector can contribute it in a needed and positive 

way to the local economy. Having the Federal Government realize 

that this is essential to competitiveness would be very, very nice.′′

The CHAIRMAN. One thing I cannot reinvent is the clock. 

Mr. LOAGUE. Okay, sorry. Let me just mention the three last people on the list. I won’t quote them. 

But Larry Peterson, with Camino Real Angels, El Paso; Robert 

Mitchell, Alpha Omega Capital Partners, Richmond, Virginia; and 

Barry Moltz, with the Prairie Angels. And what Barry said was, 

′′How Can this be a bad thing?′′

Thank you. 

The CHAIRMAN. Thank you very much. 

[Mr. Loague’s testimony may be found in the appendix.] 

The CHAIRMAN. Our next witness is Luis Villalobos, the founder 

of Tech Coast Angels. I just love the names of these organizations. 

He has handled 108 portfolio companies and received nearly $724 

million in capital. 

Mr. Villalobos, we look forward to your testimony. 

STATEMENT OF LUIS VILLALOBOS, TECH COAST ANGELS 

Mr. VILLALOBOS. Thank you. 

Chairman Manzullo, Ranking Member Velazquez, and members 

of the Committee, I thank you for the opportunity to testify. I am 

Luis Villalobos, testifying as an individual. 

My entire career has been involved with small companies as an 

entrepreneur and as an angel. I was founding CEO of two startups. When we sold them, their revenues exceeded $80 million and 

had created hundreds of jobs. Over a 25-year period, I have personally invested $3.5 million of my personal capital in 57 small companies. To date, their returns are nearly five times my investment; 

and they have created more than a thousand jobs. 

I started Tech Coast Angels in Southern California, and now it 

is the largest angel group in the country. I ran TCA for the first 

2 years and continue to be very active. In 8 years, we have funded 

108 small companies with $68 million of member capital and attracted another $656 million from external capital, mostly VCs. 

These 108 companies have created over a thousand jobs. 

I was one of nine founders of the Angel Capital Association, and 

I conduct workshops for angel group leaders. My undergraduate degree is from MIT, my MBA from Harvard, and I was a National 

Merit Scholar. I am in the course of raising a VC fund to coinvest 

with angel groups. 

I would like to make five quick observations: 

First, only a tiny fraction of small companies are what GEM calls 

high-expectation entrepreneurs, but they create the preponderance 

of jobs and wealth and economic growth. 

Second, that is where the severe funding gap is, for these highexpectation entrepreneurs. 

Third, investing in early stage ventures is extremely challenging. 

Fortunately, we know what succeeds: Active investors who use a 

professional investing process and who have extensive networks to 

support the companies they fund. 

13

Fourth, the emergence of angel groups offers a robust model for 

early-stage investing. 

And, finally, about 10 million individuals annually invest around $100 billion into entrepreneurial companies. Nine million of them 

each invest less than $20,000 per year, but only about 10,000 of the 

10 million individuals are in angel groups. There is no consensus 

on a definition for angel investors and almost no data. 

Some comments on the bills: 

I can and do support both bills. However, if I had to choose between tax credits, I would favor the one in H.R. 4565 because it 

more narrowly targets small business and because it should be 

more capital efficient by putting the credits in the hands of presumptively successful investors. 

I believe the proposed angel finance program is excellent, though 

I would like some changes. The recycling of profits is commendable. 

I also support the grant program for development of angel groups 

and the establishment of an Office of Angel Investing. 

The Federal Angel Network may need an intermediary, for example, angel groups, between the entrepreneurs and the individual investors. That is a lesson we learned in ACE-Net. 

Five recommendations: 

First, focus on closing the funding gap for what GEM calls the 

high-expectation entrepreneurs, the companies that create the most 

jobs and economic growth. 

Second, focus on investors who meet the success profile: Active, 

have professional investing processes, and have broad networks. 

Third, provide support for existing angel groups and to develop 

new ones. 

Fourth, support the Department of Commerce’s group on venture 

capital. And what they recommended was to combine the activities 

of angels who are active in seed and early stage investing with 

mainstream venture capital through some form of coinvestment 

models. 

Finally, collect statistics on the 10 million individuals that GEM 

calls informal investors and on angel investors. 

I am grateful to this Committee for holding this hearing and for 

the opportunity to testify. I welcome your questions. Thank you. 

The CHAIRMAN. Well, thank you very much. 

[Mr. Villalobos’ testimony may be found in the appendix.] 

The CHAIRMAN. What I would like to do is for Secretary 

Heinemann to walk me through a transaction, perhaps one that 

you were involved in, where you would see a benefit to an angel 

network. 

Ms. HEINEMANN. Well, I was not involved in any particular 

transaction, but I can certainly give you examples of transactions 

that have occurred in the State of Wisconsin. 

The CHAIRMAN. That would be fine. 

Ms. HEINEMANN. Okay. We developed an organization called the 

Wisconsin Angel Network, and it is a network for angel networks 

in the State. We provide services. One of those services is networking and deal flow. 

The largest angel network at the time in 2004 in our State was 

the Golden Angels Network, which is out of Marquette University. 

It had about 150 members, a good regional, very active angel netVerDate 0ct 09 2002 18:50 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 G:\HEARINGS\28742.TXT MIKE
14

work. Had never set foot on the University of Wisconsin Madison’s 

Research Park. Had never set foot. 

The CHAIRMAN. We know why, don’t we, Ms. Moore? Something 

to do with basketball, I think. 

Ms. HEINEMANN. The reason I mention that to you is because, 

through the Wisconsin Angel Network, which came out of the Act 

255 tax package that Congresswoman Moore was so instrumental 

in, we were able to create this Wisconsin Angel Network, and we 

started talking about tax and angel investing in our State. This 

network came over and met with eMetagen Corporation. eMetagen 

helped them package a $535,000 seed round through the Golden 

Angel Network, and that is what created the 10 jobs at the research facility in Madison—additional jobs, actually, throughout 

the United States and New Jersey. 

So that particular transaction became a certified company, as a 

qualified new business venture, under Act 255. That put it on the 

radar screen along with the Wisconsin Angel Network. That made 

the connection to the Golden Angels Network, which then they 

turned around and invested in the deal and the business was created and the money was able to create those jobs. 

So that is kind of the A to Z: The tax credit package went into 

place, the network came out of it, the company became certified, 

the certification attracted the angels, the angels invested, and now 

the company is up and running with ten new jobs. 

The CHAIRMAN. I have a question here for Mr. Villalobos. The 

term ′′high-expectation entrepreneurs.′′ Mr. VILLALOBOS. Yes, sir. There is an organization that puts 

out—it is a combination of Babson in Boston and the London 

School of Business. It used to be Kauffman that was their primary 

sponsor. They put an annual report out on global entrepreneurship, 

and they have a section on the U.S. Last year, for the first time, 

they put out a specific report on what they called high-expectation 

entrepreneurs, the ones that create the job growth. 

I can certainly submit a copy for the record, if the chairman 

would like. 

The CHAIRMAN. We don’t want to attach that book to the record. 

Is that a book that you want to put in? 

Mr. VILLALOBOS. No, no, it is their report. 

The CHAIRMAN. A report? That would be fine. We will have to 

use an executive summary for that. Is there one in there? 

Mr. VILLALOBOS. I am sure there is. 

Mr. VILLALOBOS. But, anyway, that is their term for it. There are 

lots of other terms. 

The CHAIRMAN. Are these the entrepreneurs that have given 

themselves that name? 

Mr. VILLALOBOS. No, it is what they gave them. Because what 

they found is, of the huge number of small companies, a tiny fraction of them are the ones that—and that is where it came from. 

They did a survey and said, ′′Do you expect to have created 20 jobs 

or more in 5 years, or 50 jobs or more in 5 years?′′ and if their expectations met that, they fell in the high-expectation category. And 

it was those that create the jobs. 

Now, they are a tiny fraction of all the start-ups. 

The CHAIRMAN. Really? 

15

Mr. VILLALOBOS. Yes. 

The CHAIRMAN. So it is a self test? 

Mr. VILLALOBOS. It is a self test that says, when you are starting 

this business, are you expecting to create at least 20 jobs within 

5 years. 

The CHAIRMAN. And a tiny fraction only say yes to that? 

Mr. VILLALOBOS. Correct. Keep in mind that the SBA definition 

of small business encompasses 99.7 percent of all companies in the 

U.S. So it covers everything. Most of our little companies—and 

they are great, and I am not saying we shouldn’t support them. 

But they are the ones that started the little neighborhood barbershop and corner grocery store, et cetera. They are not the ones that 

take off and eventually become our Googles and MicroSofts and 

Home Depots and Federal Express. 

The CHAIRMAN. My dad had a corner grocery store, and he had 

a restaurant, so I can relate to that. 

Ms. Velazquez. 

Ms. VELAZQUEZ. Mr. Villalobos, judging by your experience, you 

appear to be an expert in angel groups. 

Mr. VILLALOBOS. Correct. 

Ms. VELAZQUEZ. Obviously, you have concluded that such groups 

are effective in soliciting projects and then analyzing and funding 

angel investments. Can you tell us about that and about the importance of the government helping to stimulate such groups and such 

interest? 

Mr. VILLALOBOS. Sure. What I like to do before I get into something is to really study it first. I had already been an angel investor as an individual, and I was approached by our business counsel 

locally on a pro bono basis to stimulate Orange County economy. 

I talked to, in fact, the founder of the Band of Angels, Hans 

Severiens, who effectively helped me think through the idea of the 

angel group; and I modeled it after the Band of Angels and added 

some process. But, at the same time, I read a Federal Reserve report; and they analyzed in detail why venture capital funds succeeded. And the reasons that they found were really two, on the 

operational side, what they called alignment and a process. Alignment simply being whoever is responsible for making the investment decision should have either their capital at risk or their compensation at risk. If you do that, that is one key element of success; 

and the other was having a professional investment process. 

What I found with the Tech Coast Angels is when you have—and 

Ian can probably tell you the same thing. When you have a group 

of 25 CEOs, former CEOs, sitting in a room talking to a company 

and analyzing what they are doing or coaching them across the 

whole process, you need both that critical mass of 20, 25 minimum, 

and you need that diversity of expertise. That really ameliorates 

the risk. 

So if you want to put capital into that segment and reduce the 

risk and increase the capital efficiency, I think an angel group is 

an excellent way to do it. 

Ms. VELAZQUEZ. My second question to you is, why do you think 

it is so important that we target the investment into small highgrowth companies? 

16

Ms. KEATING HEINEMANN. If the goal is to create jobs in economic growth, that is where you are going to get it. I think you will 

find statistics from lots of places that will show consistently that 

that is what creates jobs. That is not to say that the other small 

companies don’t because it is—it is, you know, where you have a 

fraction of maybe a percent or 1 percent may create a huge amount 

of jobs, but then when you have got, you know, the big numbers 

that each incrementally, it is like an army of ants. 

So both are very useful to our economy; but if you are interested 

in focussed capital to create lots of jobs, that is where it should go. 

Ms. VELAZQUEZ. Thank you. Ms. Keating, you mentioned creating 

a team between the State government and the Wisconsin Technology Network that created a mechanism that provides education 

and networking assistance. How important do you think such a 

government partnership is to the success of your program? And 

would you recommend that any angel bill this committee moves 

forward to take into consideration, this kind of public/private partnership tools? 

Ms. KEATING HEINEMANN. Thank you. That is a great question. 

I will say one of the first things we did, our governor was facing 

a $3 billion deficit when he took office in 2003, and our focus was, 

how could we leverage the private investments at the minimum 

cost to the government and really spirit the economy? So the first 

thing we did was we went out, and we looked to see what was out 

there, and we found the Kauffman Foundation was starting the 

Angel Capital Association, and they provided us tremendous tools 

and expertise and came into our State, taught us about angel investing, helped us start the networks. We felt it was very important not to duplicate the efforts that were already occurring in the 

private sector. And so the Wisconsin Technology Council is who we 

partnered with the State of Wisconsin, and we felt very strongly an 

angel-led program should not be in a State agency because they 

had tried it, and it didn’t work because angel investors are very 

private people. 

They want to invest their own money and it is really no one 

else’s business. But they are willing to provide data to us in an aggregate form and that is why we created the Wisconsin Angel Network. And we purposely funded it outside of the State agencies, 

Commerce and the Department of Financial Institutions gave a 

grant to the Wisconsin Technology Council to run the Wisconsin 

Angel Network, and the State agencies are not involved in the dayto-day operations, but the governor, the cabinet, the commerce, my 

department, we all highly encourage angel investing in our State, 

and we try to educate people on the tax credits that are available. 

Ms. VELAZQUEZ. I don’t think the question implies that the program will be run by the government, but that is healthy to have 

that type of public/private partnership. 

Ms. KEATING HEINEMANN. Oh, absolutely. I would agree. 

Ms. VELAZQUEZ. You know, we have, under SBA, the private loan 

programs. They are created by the SBA, but it is run by the private 

industry. It is a private/public partnership. One of the best we 

have. 

17

Ms. KEATING HEINEMANN. Our SBA in Wisconsin is fabulous. So 

I would agree with that. It does great job partnering with our 

banks and our investors. 

Chairman MANZULLO. Ms. Moore. 

Ms. MOORE. Thank you so much, Mr. Chairman and ranking 

member. I want to welcome you all again, and it has really been 

a very interesting having you here. I guess I want to put this question to our Secretary of Financial Institutions from Wisconsin. Any 

of the others that would like to chime in would be become welcome 

to do it. 

One of the reasons why I was so excited about engaging in venture capital development in Wisconsin is because literally, the area 

that I represented in the State senate was just decimated by the 

loss of manufacturing jobs. At that time, we had a 59 percent unemployment rate among African-American men. I know it is really 

no exaggeration. Bureau of Labor statistics. 

Also, I think Wisconsin has had one of the groups, the women’s 

business initiative with Wendy Ballman, and they have taken advantage to the extent that they have been available of the SBA 

products, the micro-lending they have done a fantastic job as a 

women’s organization in promulgating business activity among 

women. And I became very interested in angel investments, and indeed, I had done another program called the CAPCO program, 

which was very, very targeted. One of the—so I am really excited 

about this bill. 

I am an author of the ranking member’s bill, and one of the reasons why I was interested in that bill was because it recognized the 

real need for capital, venture capital, but also in terms of when I 

look at my district, it is important to me to have a diversity in the 

kinds of businesses that we invest in, and that we really get this 

additional source of capital down to small businesses that hit the 

whole socioeconomic strata, and so specifically—like when you gave 

your example to the Chairman about eMetagen, the research part 

at Madison. 

There’s more than one reason to be mad at them, not just because their Madison, it is like they are not Milwaukee and it is not 

where the unemployment and underemployment exists. So that 

was one reason why I was sort of interested in a broader initiative 

that looked at putting the technical assistance, the grant programs 

together, kind of package that with the venture capital, so you can 

really capital the network where it would really make the most difference. 

It is wonderful to have this extra add capacity for our research 

park in Madison, but talk to me about how you see venture capital 

being put together with other initiatives and what is happening in 

Wisconsin, maybe to direct that to—you know, help low-income 

areas. 

Ms. KEATING HEINEMANN. Well, to address the issue of—I give 

the one example of eMetagen, Milwaukee, Madison. However, there 

were 40 companies that were certified, and there were several from 

Milwaukee. I apologize I do not have that list, but I would be 

happy to provide that to you. There’s some great partnerships that 

are going on in Milwaukee. And one of them that will reach to all 

communities is the Governor’s Business Plan Contest where anyVerDate 0ct 09 2002 18:50 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 G:\HEARINGS\28742.TXT MIKE
18

one can enter that contest. There’s been a tremendous amount—all 

of the planning is being done in Milwaukee. The governor’s business plan conference and entrepreneur’s conference will be held in 

Milwaukee in June, the second week of June, and people are encouraged to apply through that process, and then they get 

mentored by—most of the VCs, there are two or three VCs that are 

based out of Milwaukee. So they are really trying to reach down— 

Ms. MOORE. There are resources for mentoring and above—in 

255, as it passed, there is the venture capital fund, but what other 

resources are brought to bear, you know, to provide the technical 

assistance and the other networking opportunities that are not 

haphazard? 

Ms. KEATING HEINEMANN. Well, it is a great question, and I will 

try to address it. It is the Department of Commerce, Bureau of Entrepreneurship. We have been very active. Pam has been active in 

going out into the State, certainly in Milwaukee, to try to make 

people aware of the grant programs that are available so people 

can write businesses—business plans and then connect them to the 

Wisconsin Angel Network, which is kind of the center where people 

can start looking for access to capital. And then we tried to identify 

the angel networks in all the States, and we put that on the 

angelnetwork.com Web site, so if someone is seeking capital and a 

mentor to help them with their business, they should be able to 

very visibly find out who that name and contact person is and the 

Milwaukee Angel Networks include the Silicon Pastures and the 

Golden Angel. 

Ms. MOORE. My time is due to expire. Mr. Chairman, am I indulged? Good. 

I am very happy, sir, that you have agreed to respond to this 

question because we are talking about putting a national venture 

capital program together, so we need to make sure it is part of a 

package. Go on, sir. 

Mr. VILLALOBOS. One thing I would urge you is to consider 

leveraging the angel groups in the community, we do that locally. 

So, for example, we sponsor an entrepreneur’s conference, which is 

now in its 22nd year. Through the people from the conference we 

also—and the angels, we do community college entrepreneurship 

programs. One of the women that went through that program then 

we put into the Tech Coast Angels Fast Pitch Competition. She 

won the competition and got funded. We can show you lots of success stories, but I think you do what I suggest to distinguish between the high-growth companies that are going to become the 

Microsofts and the other ones that are just myriad, but are the 

heart of our entrepreneurship. So all I am saying is not to not support them, but you need different programs through the two classes. 

Ms. MOORE. That is true. Thank you so much for your indulgence, Mr. Chairman. 

Chairman MANZULLO. Thank you. I spend most of my time in 

this Congress working on manufacturing issues or areas deep in 

that area, along with Ms. Moore. We make a lot of parts for the 

Harley-Davidson motorcycle. And whoever wants to tackle this. 

Perhaps Dr. Sobieski, because of your background in manufacturing and aeronautical engineering. Tell us—I don’t want to say 

19

the attitude towards manufacture, but tell us how manufacturers 

could be helped by this program. Well, what you are doing now or 

how they could be the beneficiaries of the program? 

Mr. SOBIESKI. Well, thank you for that. It depends on what you 

mean by this program. 

Chairman MANZULLO. I am sorry. The angel program. What are 

you doing for the manufacturers that otherwise would not be available? 

Mr. SOBIESKI. I think the answer to that question fits into the 

context of the several questions we have had here from Representative Moore and Velazquez as well, and that is this distinction that 

is being made between the so-called high expectation entrepreneurs, which I had to laugh at because every entrepreneur I 

have ever met is high expectation. And the—I guess what you 

might call low expectation entrepreneur, the ones who only want 

to employ—run the restaurant or the corner store or a small manufacturing concern. 

You know, my thought, Representative Moore, is that if the next 

Google started, it is not going to stick around in Milwaukee. No 

matter what program you have, it is going to migrate somewhere 

else. And no matter how targeted the—and well intentioned the design of some kind of a structure, if you really want to drive in a 

job creation and innovation creation, you need to do something that 

is more environmentally focussed. 

It changes sort of the environmental structure that one accesses 

capital with, rather than pull one’s hair out trying to figure out 

how one can design a targeted program. It is just extremely challenging. We have been, all of us here, in this business for years, 

and it is still a matter of debate about how it actually really works 

at the angel level. We all have our anecdotal stories and our gut 

impressions, but if we were to actually design a program, it would 

be quite tricky. 

And so what is appealing about these tax credit notions is, you 

know, if you make capital easier to access, it will be just as easy 

to access in Milwaukee as it is in Madison. And if people run out 

of high tech entrepreneurs in Madison, they will come over looking 

in Milwaukee for more of them. And that is the way you would actually create opportunities in every sector, including manufacturing, which is, you know, if you have a choice between investing 

in $100,000 to buy a yacht or investing $100,000 to invest in a 

sheet of paper that says 10,000 shares of Acme Incorporated, the 

proposals in the tax credit provisions you are proposing would 

make that sheet of paper with that stock certificate a little bit 

more valuable, and you would be a little bit more inclined to maybe 

forgo the yacht and go for helping out someone. 

Chairman MANZULLO. You say that because there are a lot of 

yacht owners in Milwaukee? Anybody else want—Ms. Preston, do 

you want to take a whack at that question? Manufacturers. 

Ms. PRESTON. A lot of times what we are seeing now with traditional industries and sort of the reawakening of the industry is the 

application of high technology, of software systems and those type 

of things to the manufacturing sector, and having dealt with this 

question in a number of places around the world, particularly such 

as in Canada, in Alberta, where it is really hard to talk about anyVerDate 0ct 09 2002 18:50 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 G:\HEARINGS\28742.TXT MIKE
20

thing but oil and gas, particularly right now, but telling them that 

the most important thing for them to do is to diversify their economy is that identifying technologies that have applications in a 

multiplicity of silos of industries, and one of them is in the manufacturing area. 

So I see where the high-tech computer software type of industries can have a multiplicity of applications and actually increases 

efficiencies in those manufacturing industries, and those type of 

companies that are adjunct or complementary to the traditionalbased industries in those regions do very well because they complement those traditional industries and take them into the 21st 

century and give them a revitalization. 

Chairman MANZULLO. You know, one of the hidden secrets of 

manufacturing is that people look at Google, for example, as a service. Well, it may be a service, but look at the mass of manufactured 

items that are used to run that service. You know, from the search 

engines themselves right down to the individual computers, which 

obviously are all involved in manufacturing. 

Ms. Velazquez, do you have more questions? Oh, I am sorry. Oh, 

yes, go ahead, please. 

Mr. VILLALOBOS. Two quick remarks. We do, as angels, fund 

manufacturing companies. For example, LandRoller is a roller—it 

is the next generation of inline skates. Very exotic. It is direct manufacturing. Cargo Tech, they make the shipping packages to be 

able to ship things that are frozen or very cold. So angels will fund 

manufacturing companies. 

And my second point I wanted to make, the key point I am trying to distinguish is the size of the company. If we provide tax 

credits, I don’t think we should be—I think we should be doing 

them for two classes, the small start-ups that can grow very fast 

and the little companies that are the heart of our industry; but if 

we are not careful with the definition of a small company, we will 

be funding a Google when it was already $20 million in revenues 

or $5 million in revenues. 

I don’t suggest that we fund companies that can already get venture capital or other funds easily that we focus our credits and our 

efforts in truly the little companies, whether they are able to grow 

large or not because they each have a very strong impact on our 

economy. 

Ms. VELAZQUEZ. Mr. Villalobos, following that, the comments 

that you were just making, what factors should be included in a 

new definition of angel investment companies, qualifying companies to ensure that incentives are targeted to the most appropriate 

companies? 

Mr. VILLALOBOS. That they be very early stage; and I don’t know 

if you would want to put implicit criteria, like $2 million in revenue 

or less or 20 employees or less, at the time that you are funding 

them. A company that has got even 25 employees probably is doing 

2.5 million or more in revenue, even 100,000 per employee, that is 

right in the sweet spot of where VCs will come plunging in or a 

bank will. 

So it is that, that they are very small and young, and then distinguish two classes, the ones that are very high risk because that 

is where you want to put angel money in, and then the ones that 

21

are more what Congresswoman Moore is looking for, to develop the 

infrastructure in neighborhoods and those you want to find a way 

to involve again, individual investors that huge pool of 10 million 

in some way ideally intermediated with an angel group or somebody that can help to make their investment safe but have their 

own capital at risk. 

Ms. VELAZQUEZ. What do you think the Federal Government’s 

highest priorities should be in regard to angel investing? And any 

of the members of the panel can comment. 

Mr. VILLALOBOS. Well, I think the model that has certainly been 

proven that angel groups, per se, work very well. So that should 

be one, is help to drive more investors into angel groups, help to 

elevate the level of professionalism within our angel groups, and 

then use the angel groups to leverage because again, back to that 

concept of alignment, if I am in an angel group, and I have got my 

capital at risk, it is a lot easier for Dan, who may not be an angel, 

to put in $5,000 along with me, whereas if he is trying to do it 

alone, it would be very, very risky. 

Ms. PRESTON. Oh, I am sorry. 

Mr. LOAGUE. I see innovation is very important because competitiveness is very important. I have been to China, seen some of the 

things that are going on over there. The angel market, by the way, 

is developing over there. The technology marker. Some of the folks 

that got their Ph.D. From the University of Maryland are back in 

China right now, funded by VC companies over there. Innovation 

is very important, and I think that it cuts through every kind of 

programmatic thing you are looking at. It goes to more than just 

low income. It is anything that is innovative, anything that has a 

high-growth potential, anything that has a global competitive quality is where we want to be at and without participation by angels, 

we are not going to get there, and that is why this bill is important. 

Mr. SOBIESKI. In terms of the Federal priorities, I would differ 

with Luis that the Federal Government should have any priority 

in terms of angel groups. I think angel groups are a natural manifestation of the development of the financial food chain. And they 

are forming on their own, they are figuring out how to operate as 

businesses, and I would, in fact, be wary of any kind of government 

incentive or interaction with angel groups because of the danger of 

perturbing a natural market process that is still good for it. 

The tax credit changes sort of the environmental environment in 

which capital decisions are being made to be deployed. People criticize American society that we are too consumptive, and it is really 

making someone, to use my yacht example, but that is an extreme. 

It is making someone make a choice between, should I buy a new 

car with this $25,000, or should I invest in that—my neighbor’s 

nephew’s company that I heard about that he is looking for 

$25,000? Car, piece of paper? Car, piece of paper? Oh, yeah, there 

is that tax credit. I can get a little bit of a break. Okay. I will give 

that $25,000. 

So in terms of the prioritization, I would agree with Luis. It 

should be focussed on that kind of entrepreneur. 

Ms. VELAZQUEZ. What about data collection? 

22

Mr. SOBIESKI. I think data collection, no one can complain about 

data collection. That is an absolute missing piece in the puzzle, and 

the more data we can get, the better. The danger is, in all data collection is the implied authority by which it is collected. So you have 

enormously different data between the survey that Luis cited and 

University of New Hampshire, order of magnitude different data. 

And if the Federal Government gets involved in collecting data 

that has the imprompter of the United States Government, that 

speaks with great weight. If it is wrong and influences future policy decisions then that is, of course, a danger. The beauty of the 

venture capital system is it kind of developed in the absence of any 

of this. It wasn’t taken seriously until really Apple Computer started, and then people took it seriously. 

Ms. PRESTON. I wanted to add partly to what Dr. Sobieski indicated. I think we need to remember that the vast majority of investments by angels are done by individuals, not members of angel 

groups, and that process in the economy has been working very 

well for a number of years, and what we are trying to do is further 

promote it and enhance it to putting more money into innovative 

ideas so that angel groups are a relatively new concept here in the 

United States and elsewhere, and a very interesting and obviously 

I support them. I have written a book on angel organizations, but 

I do also recognize that it is, by far, the minority way of investing. 

And even within angel groups, individual angels make their own 

decision on investing, and therefore, as Dr. Sobieski was indicating, 

the process and the economy has its own ways of creating the right 

system for investing. 

When we talk about investing, angels aren’t going to be investing 

in a company that is worth $30 or $40 million because they are 

going to be raising more than $50,000, $100,000, $500,000. That is 

where angels play. So angels will naturally be investing in companies at an early stage. That is where the market is for them because of the amount of money they have to invest and that the 

company needs at that time. 

And angels, I would like to think, are relatively smart, intelligent 

individuals that although we do make bad decisions at times, but 

we play the odds. We are right some of the times, and we make 

money doing this. And that process is part, again, of that process, 

just like venture capitalists develop, angels are developing in a 

much more sophisticated way and do a very good job on their own 

of investing. 

These are highly independent autonomous anonymous individuals that don’t want their name in databases and aren’t interested, 

for the most part, in joining groups. However, that is not to say 

angel groups are bad. I think they are a fabulous idea. I just don’t 

think it is something that we necessarily need the government to 

interject themselves into. 

Mr. VILLALOBOS. Well, two comments. One, I would question, 

one, we know in any level that the investment by these, quote, 

large group of angels of some 220,000 angels that we know the results of. I would challenge anybody to produce anything that remotely claims some kind of results from that investment. I don’t 

think we know who they are. I don’t think we can—I would like 

to see anything that supports that statistic. I don’t think it exists. 

23

And the second point is, I think the ranking member’s approach to 

the angel groups to provide a co-investment fund that recycles and 

puts the profits from that back into that fund, I don’t think it 

would perturb the ecocycle of the angel groups any differently than 

providing them credits. 

You are essentially giving a credit to an individual. You can give 

them to the angel group; and the thing I like even better about 

that is it recycles the money back into that pool. So it keeps on 

fueling. Either of the two I can support, but I think—I don’t see 

any problem with disturbing that ecosystem. 

Ms. PRESTON. One of the things we need to remember regarding 

the ACE Act is the one piece at the end for a taxpayer to have the 

ability to use a tax credit is the separate document that they file 

with their IRS return that indicates the name and the Tax Code 

number of the company to which they are requesting a credit. 

Therefore, we probably have the ability to gain more information 

about angel investors than we ever had before, including the 

225,000 from that simple reporting requirement. It has the opportunity of being one of the most invaluable pieces of information we 

could get in a passive manner for the Federal Government. 

Chairman MANZULLO. Mrs. Kelly? 

Mrs. KELLY. Thank you, Mr. Chairman. You may have covered 

this. I am sorry I got here late. Very busy day for a lot of us. I represent the 19th district in New York and in New York State. I understand that angel investors in New York State actually are—we 

have a tax incentive that is available to angel investors. What I am 

concerned about is that New York’s tax incentive that is available 

to our investors could be destroyed by the AMT. I want to know 

if it is correct that tax exempt funds that would be created by this 

bill would still be subject to the AMT, unless we reform the AMT 

so that these things don’t get wiped out. Anybody want to talk to 

me about that? 

Mr. VILLALOBOS. Well, the assertion was made at the angel capital, at the annual meeting that that was the case, but there was 

no basis given for it, but somebody said that they had looked at it, 

and that the tax credit would be illusory because for most angel investors, the AMT would kill it. Now, that was just made as a bald 

assertion with no backing for it. So, and people were concerned, but 

I couldn’t tell you. 

Mr. SOBIESKI. I think that comment also highlights the distinction amongst angels. That was indeed a comment. We were both 

at this angel capital association conference, and the feed back was, 

oh, the tax credit is great, but if you really want to spur investment, get rid of that AMT thing but again, these are extremely active angel investors who tend who invest in companies like Luis 

was describing that have the potential to become the next Google. 

It is not the small nephew’s company employing six people making 

widgets and that would be sold locally. The tax credit, in its pure 

form, might very well be that beneficial to the vast majority of angels who only make one or two investments a year of the 25,000 

to 50,000 size piece. It may arguably be less helpful to say members of my organization, who may be extremely helpful in investing 

hundreds of thousands of dollars in high-growth companies and 

they tend to have lots of other income that may very well be interVerDate 0ct 09 2002 18:50 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 G:\HEARINGS\28742.TXT MIKE
24

fered with the AMT but in terms of the overarching goal 

unleashing innovation across the board in every community from 

Madison to Milwaukee and in every different kind of little company 

as well as potential companies that might become Google, I don’t 

know if AMT would be as much a disincentive. 

Mrs. KELLY. I take it from your comments, none of you on this 

board would know whether or not the current AMT we have going 

forward would wipe out that New York State tax incentive? You do 

not know for sure? 

I wanted to ask you, Ms. Preston. You were talking about the 

ratio of the potential angel investors to active angel investors. It 

is pretty big. 

Ms. PRESTON. Yes, it is. 

Mrs. KELLY. I would like to know what kind of an improvement 

to that ratio you would expect if we had a Federal tax incentive. 

You think that would be a better—that ratio would change? And 

how? 

Ms. PRESTON. I think it would take the ratio to having individuals that are, right now, either sitting on the fence or have not 

done angel investing. It would give them that final incentive to 

look more seriously at the opportunity because in some respects, 

up-front investment tax credit, as we are proposing, reduces the 

risk, and so it gives them an inducement to make that investment 

that they might not otherwise make. 

And as Dr. Sobieski was saying, between buying the yacht or putting the $100,000 into the company of interest, that provides a 

greater benefit to do that. So yes, and we have had anecdotal responses from a number of angels out there that have said, this is 

fabulous. I can get more individuals involved directly in angel investing, and I think Secretary Heinemann, her experience in Wisconsin bears that out. 

Mrs. KELLY. So what you are saying you think instead of seven 

to one or ten to one, we would get a far better ratio with a split 

like five to four or something, people digging in, doing something 

like—actually getting involved as angel investors. 

Ms. PRESTON. Even if we get a 10, 20 percent, 20 percent in- crease, when you look at $23 billion right now estimated being invested or other numbers you look at, that is a significant additional 

money into our economy to create jobs, and to advance innovation. 

Mrs. KELLY. Okay. Thank you. I am out of time. 

Chairman MANZULLO. Let me ask this question: How far should 

government get involved in what you are doing? Secretary Keating, 

you seem to draw a very clear line between a government function; 

and private functions. I appreciated your answer. 

Ms. KEATING HEINEMANN. Well, I think the government can 

drive investments from the standpoint of providing incentives. And 

I would like to just kind of address, and I guess Ms. Velazquez 

mentioned, and also Congresswoman Moore talking about urban 

communities and also businesses that need to be funded in areas 

that might be low-to-moderate income. 

And I think if you, you know, tossed around the idea of putting 

a Federal tax package together, that had some type of incentives 

maybe to focus on those particular areas, and the most need for 

those types of businesses, certainly if, you know, the government 

25

were to put those incentives in place, usually the investors follow 

that particular incentive if the business is a good business opportunity for them. 

And, you know, I will just give you an example. I regulate banks, 

and I have done, you know, I have seen a lot of data on angel investing and the majority of bank decision makers who is deciding 

who is getting those loans are not women or minorities. I mean, 

they make up less than 12 percent. And if you look at the angel 

investing, less than 8 percent of the angel investors out there are 

women. So when you are a person going to look for access to capital, if there is something that drives them there, some type of tax 

credit, that they are actually seeking to invest in your type of business, I think that is a good incentive. 

And when we were talking to the phenomenal angel fund yesterday and their focus is women and minorities, they are very interested in actively pursuing these businesses, and one of them is in 

Resina. That is a manufacturing company, and the woman is the 

CEO, and she has had an extremely difficult time finding capital 

for a very high-tech, high-growth-type business. And phenomenal 

funds is now looking at them because now they know that, you 

know, there’s this tax package out there, 25 percent credit for seed 

funds, and their seed fund is focussed on this particular area. So 

I would just target your policy around where you want the results. 

Chairman MANZULLO. Ms. Moore—I jumped ahead of you. I am 

sorry. 

Ms. MOORE. Mr. Chairman, you can always jump ahead of me, 

but you know what, thanks for yielding because I have got a group 

of constituents outside waiting on me. And I will be brief, Mr. 

Chairman. 

Thank you so much, Madam Secretary, for revisiting that question, because I was feeling a little bit perplexed by some of the 

comments that Dr. Sobieski made, and perhaps you have answered 

that. He said that he would be, you know, and if I am characterizing them incorrectly, please let me know. 

You said that you would be concerned about the government directing some of the creating incentives, perhaps, for tax credits to 

go in a certain place. And that you would rather see sort of the 

market forces drive that decision. 

And I think the Secretary just said, you know, we can create a 

market by having certain priorities because, for example, there are 

people who want to do socially responsible investing. You know, 

they might say I want to invest my money in only environmentally 

pure activities. And they can actually create an opportunity for 

somebody who wants to do that, who wouldn’t otherwise have an 

investor. They may say, we want it targeted. I want to help women 

get themselves together. I want to help minorities. I want to help 

new immigrants. I want to help this region. You know, I am Magic 

Johnson from this particular inner city community, and I want to 

give back to that particular community. 

And only God knows why certain things like the Cabbage Patch 

Doll or Pet Rocks or Elmo made it, but for the fact that they had 

enough money to do it. So it seems to me that, you know, that I 

think the government can do a great deal toward providing grants 

and incentives and so forth. And, you know, as the Secretary sugVerDate 0ct 09 2002 18:50 Nov 17, 2006 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 G:\HEARINGS\28742.TXT MIKE
26

gested, not invest in projects that don’t have any prospects, and I 

think many of you have said it already here today. That I think, 

it was Mr. Loague. How do you say your name? 

Mr. LOAGUE. Loague. 

Ms. MOORE. Loague. Some are going to make it; some are not 

going to make it. I think if we give tax credits, that we do, as a 

government, have the right to create some expectations. I mean, we 

don’t have any doctors in a certain rural area. We want to create 

incentives for medical facilities there. That we can sort of direct 

this. And I just want to sort of—I wanted you to clarify what you 

meant by we should just let the market do it. I mean, I am a capitalist, but free fall and capitalism are kind of different things. 

Mr. SOBIESKI. Sure. Thank you. I think we are actually in agreement. I was tailoring my comments to the provisions in one of the 

bills that would have the SBA provide grants to angel groups with 

a targeted focus on certain areas of investing, which I felt was just 

given the scope of the problem that you outlined, which is copied 

across the country, is not going to be nearly as effectual as tax 

credits could be. And they could be targeted tax credits. 

I think, though, that that would be orders of magnitude more effective than attempts to design a program that would give grants 

to an angel group to invest in certain kinds of deals in certain 

areas. 

Ms. MOORE. Okay. 

Mr. SOBIESKI. If you just created, say, tax credits for women and 

minorities, that would be hugely more effective than having an effort inside the SBA to give money to angel groups to invest in 

women and minority groups. So I am a big believer in the ability 

of the government to create incentives. I am just arguing that it 

should be done with tax credits, not with additional bureaucracy or 

design programs. 

Ms. MOORE. Thanks for that clarification. 

Mr. VILLALOBOS. Yes, Congresswoman. I think I agree—I know 

I agree with Ian, but I think the area that we are talking differently is, which companies are we talking about? 

If you are talking about the ones you are interested in, creating 

that broad level of economic activity, then I think a tax credit, a 

broad tax credit is great, provided you don’t allow that tax credit 

to be used to be investing in companies that are far along, you 

know, much more developed. 

If you are looking to create jobs and growth overall, then the 

focus is on the ones that can grow very fast, and I am not saying 

we shouldn’t do both. I am just saying, separate those two programs and don’t try to use the incentives from one to the other. 

The other point is, if I am understanding this right, if you give 

me a tax credit, you are not reducing my risk. Or if you do, the 

program doesn’t work. Let us say I am going to invest $100,000 in a venture. Well, if 

you give me a tax credit and I only effectively invest 75, we haven’t 

won at all. We haven’t expanded the investment base. So for this 

to work, if I am going to invest 100,000, you give me the tax credit 

for 25, and I am going to reinvest that 25 you gave me, now we 

have grown the capital pool. And again, if I am looking at that venture, if I am investing 100,000 versus 75, my risk is that it goes 

27

all down the tube. The only thing you do is cut down the amount 

I have at risk. Not the risk. The risk of that company going broke 

is the same if I put 75 or a hundred in it. 

So we have to be careful, and we need to make sure that the program, and I think the program, a tax credit would stimulate me 

if I will invest 100,000, I will invest 100,000. If I get 25 credit, I 

will invest that too. 

Ms. MOORE. Thank you so much. And thank you, Mr. Chairman. 

Chairman MANZULLO. Thank you. This has been very interesting. I ran into a gentleman last night, Adam Heller. He is a 

floor trader, is that it, at the MERC and wanted to do something 

different in his life, and he bought a sheet metal fabrication company in Galva, Illinois. It has 35 employees. And he had a very difficult time convincing anybody that somebody who was a floor trader could run a factory. And I said, well, I could understand the concern with that question. But he has done the most amazing thing. 

He has taken all the market principles he learned on the floor, including his wealth of knowledge in international relations to successfully own and run a company that does classical sheet metal 

fabrication. They also make point of display fixtures, such as the 

rug samples that are held on display at Home Depot. They manufacture those. He has been able to begin exporting those to Europe? 

So I had never met anybody who came from the financial world 

who just wanted a change in his life and went into manufacturing. 

I was very impressed because I think this shows the power of the 

angel investors, and the wealth of knowledge that they can give to 

somebody who is involved in manufacturing, because it is not just 

the money, but it is the know-how and advice that can take the investors’ capital along, obviously with that of the entrepreneur’s 

capital, and make that work in seemingly impossible situations. 

Well, I want to thank you all for coming. You came from Washington and Wisconsin and California. Dan, you came last, but that 

is because you are the closest. 

Mr. LOAGUE. That is right. I got caught up on the Metro. I used 

to live next to Lorrie, though. 

Chairman MANZULLO. You did? Where? 

Ms. KEATING HEINEMANN. Well, in Madison. He was in Madison. 

Mr. LOAGUE. We were in Madison together. 

Chairman MANZULLO. Ms. Moore isn’t here. You are ganging up 

on us now. I appreciate it. You have really shed a lot of light on 

this subject. I can’t tell you the tremendous amount of interest that 

there is in this. And a lot of it has to do with the fact that the participating securities program was eliminated. But if something can 

be picked up in the private sector, so be it, and more power to you. 

And thank you for coming. This hearing is adjourned. 

[Whereupon, at 3:45 p.m., the committee was adjourned.]

28


28742.001
29


28742.002
30


28742.003
31


28742.004
32


28742.005
33


28742.006
34


28742.007
35


28742.008
36


28742.009
37


28742.010
38


28742.011
39


28742.012
40


28742.013
41


28742.014
42


28742.015
43


28742.016
44


28742.017
45


28742.018
46


28742.019
47


28742.020
48


28742.021
49


28742.022
50


28742.023
51


28742.024
52


28742.025
53


28742.026
54


28742.027
55


28742.028
56


28742.029
57


28742.030
58


28742.031
59


28742.032
60


28742.033
61


28742.034
62


28742.035
63


28742.036
64

Æ


28742.037