I met with Gordon MacGregor from SmarteSoft which makes test automation software for web-based and client-server applications. The company’s software improves software validation times by up to 5x with substantially lower costs. They are targeting a horizontal audience but with some emphasis on key verticals such as medical device companies trying to meet FDA requirements. The market for automated testing of software of course is huge. The IDC puts the market size well over a $1B a year. The company is out raising funding to scale up the business. They are shifting from a standard software license agreement to a Software As A Service (SAAS) model. This will help generate higher revenue for the company.
I recommended to Gordon to look at DOORS by Telelogic. It’s a requirements management software package that is complementary to his testing application. Anyone using DOORS is a prime candidate for using SmarteSoft.
Gordon comes from Glasgow, Scotland. I used to spend my summers in Scotland so we had a nice chat about the bed and breakfast scene there as well as the new bridge (it’s not so new any more) that connects the Isle of Skye to the mainland. It’s a debate whether the bridge is a step forward or backward. In any event, this company is moving fast and should be interesting to watch.
Best regards,
Hall T.
Wednesday, November 14, 2007
Monday, November 12, 2007
Idea 2 Product Competition—Technology and Innovation on Display
Today I had the opportunity to judge the Idea2Product competition held each year at the University of Texas Austin. Universities from around the world apply to show off their ability to take a technology and turn it into a commercially-viable product.
The University Illinois-Urbana showed off a device that when implanted reads neurological signals and wirelessly transmits it to a computer which further processes the data which could move a wheelchair movement or generate speech. The Audeo is the name of their product. I recommend you check out the wheelchair demo on their web site. It’s quite remarkable. Originally targeted at the disabilities market, the developers envision applying the device to gaming applications.
The University of Texas team proposed BioPristine – an antibacterial coating sprayed onto a surface for eliminating MRSA – a highly contagious form of Staph infection which when coupled with other conditions can cause death. The proposed formula provides improvements over Lysol, chlorine, and ammonia-based products as it’s not water soluble and therefore does not wear off with repeated washing or usage. An application will last up to 45 days. The developers plan to target the school system.
The San Jose State team proposed a utility vehicle powered by a combination of renewable energies including wind, solar, and electric motor technologies. It wasn’t clear how much protection their business methods patent would help them since their target market is India and China.
The Purdue team proposed a flow cytometry-based device for detecting CD4 levels in AIDS patients. The device is low cost and super simple to use as it is targeted for use in Africa. The competition focuses on the technology and innovation elements. The challenge with ‘social entrepreneurship’ is how to make money from it.
Finally, KTH from Sweden proposed a diabetes testing device that comes in a single unit so it is lower in cost and easier to use. It was difficult to understand how their device works as they declined to give any details on it for fear of protection.
The University Illinois-Urbana showed off a device that when implanted reads neurological signals and wirelessly transmits it to a computer which further processes the data which could move a wheelchair movement or generate speech. The Audeo is the name of their product. I recommend you check out the wheelchair demo on their web site. It’s quite remarkable. Originally targeted at the disabilities market, the developers envision applying the device to gaming applications.
The University of Texas team proposed BioPristine – an antibacterial coating sprayed onto a surface for eliminating MRSA – a highly contagious form of Staph infection which when coupled with other conditions can cause death. The proposed formula provides improvements over Lysol, chlorine, and ammonia-based products as it’s not water soluble and therefore does not wear off with repeated washing or usage. An application will last up to 45 days. The developers plan to target the school system.
The San Jose State team proposed a utility vehicle powered by a combination of renewable energies including wind, solar, and electric motor technologies. It wasn’t clear how much protection their business methods patent would help them since their target market is India and China.
The Purdue team proposed a flow cytometry-based device for detecting CD4 levels in AIDS patients. The device is low cost and super simple to use as it is targeted for use in Africa. The competition focuses on the technology and innovation elements. The challenge with ‘social entrepreneurship’ is how to make money from it.
Finally, KTH from Sweden proposed a diabetes testing device that comes in a single unit so it is lower in cost and easier to use. It was difficult to understand how their device works as they declined to give any details on it for fear of protection.
The winner of the competition was the University of Illinois with their Audeo technology. The second place winner was RWTH Aachen University which had a cancer screening kit with a special screening marker that could detect several types of cancers, and third place went to the University of Michigan which had a microfabricated battery-replacement component that generated power by scavenging environmental energy.
The quality of the plans is quite high. If you ever have the chance to see the competition, I recommend it, as it keeps one up to date with new technologies.
Best regards,
Hall T.
The quality of the plans is quite high. If you ever have the chance to see the competition, I recommend it, as it keeps one up to date with new technologies.
Best regards,
Hall T.
Wednesday, November 7, 2007
DLA Piper Breakfast—State of Venture Capital & Angel Investing
Paul Hurdlow of DLA Piper held a breakfast forum this morning at the Four Seasons hotel. I sat on the panel with Rudy Garza of G51, Wes Cole of Gefinor Ventures, and Steve Fredrick of Grotech Capital based on the East Coast.
One of the topics of discussion is how do angels protect themselves from dilution that comes with subsequent rounds of investment. The short answer is to seek deals that don’t need so much capital and entrepreneurs that don’t have “IPO” as stars in their eyes. Back in the roaring ‘90s entrepreneurs would come with their “funding plan”. Seed stage money today, Series A in six months, Series B in another six months, etc. For angels that kind of thinking is a non-starter. I remember some of the companies in the ‘90s spent more time with the investors rather than their customers. I always thought there was something wrong with that picture.
Another topic was the general slow down in venture capital. John Hurley showed the latest stats from VentureOne which highlighted a slow down in funds invested. I highlighted the increase in angel investing and attributed a portion of this shift to the reduced cost of starting up businesses. What took $5M to start a business in 1997, now takes only $500K in 2007, in some cases. Of course, semiconductor and life science deals still need large amounts of capital to pay for basic research, software and consumer product companies are much cheaper to launch today due to outsourcing, offshoring, and better productivity tools (email, web, etc).
The Angel Capital Association released a survey run in the first half of this year. Over 50% of the angel groups saw Dealflow rise significantly. The average membership number grew 22% (from 42 to 51). Anecdotally, I’ve seen angel activity increase substantially from 2006 to 2007. I attended the ACA summit in 2006 in which there were150 attendees. The summit this year doubled to over 300 attendees. Across the board, Dealflow was up as well as membership.
The DLA Piper events are great fun. Paul paid me one of the greatest compliments. He said he reads my blog.
Best regards,
Hall T.
One of the topics of discussion is how do angels protect themselves from dilution that comes with subsequent rounds of investment. The short answer is to seek deals that don’t need so much capital and entrepreneurs that don’t have “IPO” as stars in their eyes. Back in the roaring ‘90s entrepreneurs would come with their “funding plan”. Seed stage money today, Series A in six months, Series B in another six months, etc. For angels that kind of thinking is a non-starter. I remember some of the companies in the ‘90s spent more time with the investors rather than their customers. I always thought there was something wrong with that picture.
Another topic was the general slow down in venture capital. John Hurley showed the latest stats from VentureOne which highlighted a slow down in funds invested. I highlighted the increase in angel investing and attributed a portion of this shift to the reduced cost of starting up businesses. What took $5M to start a business in 1997, now takes only $500K in 2007, in some cases. Of course, semiconductor and life science deals still need large amounts of capital to pay for basic research, software and consumer product companies are much cheaper to launch today due to outsourcing, offshoring, and better productivity tools (email, web, etc).
The Angel Capital Association released a survey run in the first half of this year. Over 50% of the angel groups saw Dealflow rise significantly. The average membership number grew 22% (from 42 to 51). Anecdotally, I’ve seen angel activity increase substantially from 2006 to 2007. I attended the ACA summit in 2006 in which there were150 attendees. The summit this year doubled to over 300 attendees. Across the board, Dealflow was up as well as membership.
The DLA Piper events are great fun. Paul paid me one of the greatest compliments. He said he reads my blog.
Best regards,
Hall T.
Monday, November 5, 2007
Wireless Seed Stage Forum—Using Wireless technology to Enable Startups
The ATI and CTAN held a Wireless Seed Stage Forum today at the UT Club. It was the first time I’ve been to the UT club, and I must say it was a nice venue. We had 16 wireless entrepreneurs from across the country including California, Chicago, Huntsville, Pennsylvania in addition to Texas-based companies.
The most inventive presentation goes to Agilemesh which makes mesh-based surveillance equipment targeted at military and law enforcement units. Instead of the standard 15 slide presentation, the entrepreneur built a wireless system for us demonstrating the ease of setup and use. I could have used a little more information about their business plan as I now know how to setup their system, but I have no idea how they make money, what their business model is, or who is their competition.
A common theme throughout the day was traditional businesses seeking an outlet on the mobile phone but not quite knowing how to make money out of it. Entrepreneurs showed off solutions. One example of this is Advanced Mobile Solutions which pushes newspaper content to the mobile phone.
Zibadoo won the greatest interest from CTAN members. Zibadoo generated point of sale coupons for mobile phone users who request information about a particular service/product. During the presentation the entrepreneur gave the audience a code to text message and in return the user received a coupon for a free pizza.
RFMicron another Austin-based company, makes RFID tags that work in any geography and on in surface. By using a signal processing algorithm they are able to tune the RF frequency to the range mandated by each region of the world and also correct for the surface on which the tag is placed – whether it be metal, insulation or liquid. This is useful since RFID tags operate differently based on the material to which they are attached.
Syner Ip combined VOIP and WiMAX to provide telephone service to Hispanics living in the US.
Benesec is a 4 month old startup from California that performs mutual authentication for credit card purchases to prevent fraud.
HEMS technology makes wireless network devices for homeowners who want to monitor and control their electricity consumption in the home.
Q-track used an interesting technology called Near Field Electromagnetic Range to perform real-time tracking of a subject or device.
Yuvee showed off an advanced user interface on the PC that could download to the mobile device a new definition of the keys. One could turn a key into a speed dial for a particular website such as CNN, to get that content on the mobile phone. The interface was quite slick as it look like a virtual phone keypad that hovered over the tablet PC screen. By pressing on the touch-sensitive screen, the entrepreneur was able to adjust what the keys on the phone would do. It was like having a virtual mobile phone that you could reprogram by just touching the keys (and in some cases entering web-link information).
The event generated buzz among the investors in the room. Now let’s see if it generates some checks.
Best regards,
Hall T.
The most inventive presentation goes to Agilemesh which makes mesh-based surveillance equipment targeted at military and law enforcement units. Instead of the standard 15 slide presentation, the entrepreneur built a wireless system for us demonstrating the ease of setup and use. I could have used a little more information about their business plan as I now know how to setup their system, but I have no idea how they make money, what their business model is, or who is their competition.
A common theme throughout the day was traditional businesses seeking an outlet on the mobile phone but not quite knowing how to make money out of it. Entrepreneurs showed off solutions. One example of this is Advanced Mobile Solutions which pushes newspaper content to the mobile phone.
Zibadoo won the greatest interest from CTAN members. Zibadoo generated point of sale coupons for mobile phone users who request information about a particular service/product. During the presentation the entrepreneur gave the audience a code to text message and in return the user received a coupon for a free pizza.
RFMicron another Austin-based company, makes RFID tags that work in any geography and on in surface. By using a signal processing algorithm they are able to tune the RF frequency to the range mandated by each region of the world and also correct for the surface on which the tag is placed – whether it be metal, insulation or liquid. This is useful since RFID tags operate differently based on the material to which they are attached.
Syner Ip combined VOIP and WiMAX to provide telephone service to Hispanics living in the US.
Benesec is a 4 month old startup from California that performs mutual authentication for credit card purchases to prevent fraud.
HEMS technology makes wireless network devices for homeowners who want to monitor and control their electricity consumption in the home.
Q-track used an interesting technology called Near Field Electromagnetic Range to perform real-time tracking of a subject or device.
Yuvee showed off an advanced user interface on the PC that could download to the mobile device a new definition of the keys. One could turn a key into a speed dial for a particular website such as CNN, to get that content on the mobile phone. The interface was quite slick as it look like a virtual phone keypad that hovered over the tablet PC screen. By pressing on the touch-sensitive screen, the entrepreneur was able to adjust what the keys on the phone would do. It was like having a virtual mobile phone that you could reprogram by just touching the keys (and in some cases entering web-link information).
The event generated buzz among the investors in the room. Now let’s see if it generates some checks.
Best regards,
Hall T.
Wednesday, October 31, 2007
SBDC – Small Business Development Corporations
In our Entrepreneur Training sessions, I’m often asked about where an entrepreneur can get training and startup assistance. The Small Business Development Corporation is one resource. I had a coffee this morning with Joe Lam of the Texas State SBDC to learn more about the services they offer to entrepreneurs seeking to startup a business.
The Small Business Development Corporation is an affiliate to the Small Business Administration. They provide services to startup companies including basic business plan development, financial analysis and secondary market research. They coach entrepreneurs in how to get funding as well as how to run their business. I asked if there was a limitation on the amount of time spent with entrepreneurs, but Joe replied that as long as the entrepreneur is making progress then the SBDC will continue working with them.
There are three offices in the Central Texas area – San Marcos, Austin, and Round Rock. I asked why I hadn’t heard more about their services to the startup community. Joe replied that the federal government which funds the SBDC didn’t earmark any funds for advertising so they’re limited in their ability to promote their services. I invited Joe to come out to our next entrepreneur training which will be December 4, 2007, to tell us more about their offering. If you’re looking for help in your startup, please join us. You can see more at this site.
Best regards,
Hall T.
The Small Business Development Corporation is an affiliate to the Small Business Administration. They provide services to startup companies including basic business plan development, financial analysis and secondary market research. They coach entrepreneurs in how to get funding as well as how to run their business. I asked if there was a limitation on the amount of time spent with entrepreneurs, but Joe replied that as long as the entrepreneur is making progress then the SBDC will continue working with them.
There are three offices in the Central Texas area – San Marcos, Austin, and Round Rock. I asked why I hadn’t heard more about their services to the startup community. Joe replied that the federal government which funds the SBDC didn’t earmark any funds for advertising so they’re limited in their ability to promote their services. I invited Joe to come out to our next entrepreneur training which will be December 4, 2007, to tell us more about their offering. If you’re looking for help in your startup, please join us. You can see more at this site.
Best regards,
Hall T.
Monday, October 29, 2007
Mock Terms Sheet Exercise with Andrews Kurth
CTAN joined in a “Mock Terms Sheet” exercise last evening. In the exercise, angels are paired with entrepreneurs, given a case study, and a sample terms sheet. The two then negotiate the closing of the deal. It’s a great exercise in understanding deal structuring as well as honing negotiation skills. The event was sponsored by Andrews Kurth and led by Matt Lyons. To make things interesting Matt placed a few “gems” into the terms sheet to see if people would catch them.
The case study had a convertible note and a preferred equity terms sheet that were negotiated at the same time. The entrepreneurs at first felt that was unrealistic, but I raised the point that angel investors want to see a valuation set and so convertible notes are not entirely satisfactory to the investor. We all agreed to negotiate both at the same time.
The entrepreneurs were quick to figure out that their stock was taken back to zero and they had to work another year for 20% to vest. For an entrepreneur to start a company and work for several years and then see his equity position taken away is quite an emotional thing. We agreed not to press the point. Matt indicated that was the first thing most entrepreneurs look for.
The entrepreneurs were also quick to figure out that the investors had most of the board seats from the get go. This also is anomalous among deals as control needs to be divided among investors, founders, and independents.
Each point in the terms sheet is there for a reason. As an investor you want to identify the risks in the deal and then apply the terms that mitigate the risk. In the end, it’s important to negotiate a deal that incentivizes both investors and entrepreneurs to the same goal and exit. If the goals are misaligned then things get difficult.
Best regards,
Hall T.
The case study had a convertible note and a preferred equity terms sheet that were negotiated at the same time. The entrepreneurs at first felt that was unrealistic, but I raised the point that angel investors want to see a valuation set and so convertible notes are not entirely satisfactory to the investor. We all agreed to negotiate both at the same time.
The entrepreneurs were quick to figure out that their stock was taken back to zero and they had to work another year for 20% to vest. For an entrepreneur to start a company and work for several years and then see his equity position taken away is quite an emotional thing. We agreed not to press the point. Matt indicated that was the first thing most entrepreneurs look for.
The entrepreneurs were also quick to figure out that the investors had most of the board seats from the get go. This also is anomalous among deals as control needs to be divided among investors, founders, and independents.
Each point in the terms sheet is there for a reason. As an investor you want to identify the risks in the deal and then apply the terms that mitigate the risk. In the end, it’s important to negotiate a deal that incentivizes both investors and entrepreneurs to the same goal and exit. If the goals are misaligned then things get difficult.
Best regards,
Hall T.
Wednesday, October 24, 2007
Open4Business—What Angels Look for In Deals
CTAN held a panel recently at the Open4Business Conference to talk about what angels look for in a deal. We opened with a recent survey from the Angel Capital Association showing the number of deals is up by 50%, and the average number of members in an angel group has grown from 41 to 52 in first six months of this year. Finally, syndication of deals between angel groups is up dramatically as well. Last year, I attended the ACA conference in New York. There were 150 of attendees. This year, the same conference had over 300 attendees. Across the board, membership was up and deal flow was up.
Joining me on the panel were Bril Flint and Monty Myers of Eureka Software which has been in Austin for 25 years. Each gave their view of what makes for a good angel deal. Bril looks for a competitive advantage or a unique angle that can be protected. Monty talked about helping companies who had made the sale but needed to help to deliver the product.
We talked about the different types of angel investors. There’s the Marriage Partner – the one who will be there through thick and thin. There’s the Networker – the one who knows everyone and can help connect people into jobs or partnerships. Then there’s the Therapist who focuses on coaching the CEO. The key question he asks is, “so what keeps you up at night?”
Questions ranged from how to value a company to how many women are in the group. We gave some rough rules for the valuation question – if you have a cash flow you can calculate based on that. If you have an asset-based business you can use that as well. I like the 4-point rule. You get $1M for a complete and seasoned management team, $1M for a complete product that’s shipping, $1M for a raft of happy customers, and $1M for a filed patents providing sufficient protection to the business. It’s rough but makes for productive conversations.
It was clear that the number of women involved in angel investing is quite low and there should be more.
Best regards,
Hall T.
Joining me on the panel were Bril Flint and Monty Myers of Eureka Software which has been in Austin for 25 years. Each gave their view of what makes for a good angel deal. Bril looks for a competitive advantage or a unique angle that can be protected. Monty talked about helping companies who had made the sale but needed to help to deliver the product.
We talked about the different types of angel investors. There’s the Marriage Partner – the one who will be there through thick and thin. There’s the Networker – the one who knows everyone and can help connect people into jobs or partnerships. Then there’s the Therapist who focuses on coaching the CEO. The key question he asks is, “so what keeps you up at night?”
Questions ranged from how to value a company to how many women are in the group. We gave some rough rules for the valuation question – if you have a cash flow you can calculate based on that. If you have an asset-based business you can use that as well. I like the 4-point rule. You get $1M for a complete and seasoned management team, $1M for a complete product that’s shipping, $1M for a raft of happy customers, and $1M for a filed patents providing sufficient protection to the business. It’s rough but makes for productive conversations.
It was clear that the number of women involved in angel investing is quite low and there should be more.
Best regards,
Hall T.
Monday, October 22, 2007
Social Networking Sites – Discussion with Matt Cohen of Large Small
I had a coffee with Matt Cohen this morning at Primo360 which has become my office away from the office. Actually, I enjoy their flavor of espresso. Matt and I discussed the Social Networking space and the phenomenal buyouts going on. There are many social networking startups in Austin so of course we see a growing number of deals from this space.
Matt believes that Facebook is the new AOL for the twentysomething generation. For those who don’t remember, AOL was started as a community site to connect with friends and family and there was plenty to do on the site. AOL later in life changed to an advertisement model and became just another “channel” on the web. Matt indicated that the twenty something generation and younger communicates either through Facebook or through text messaging. The email system that the older generation uses is too open. Anyone can send you an email message. This is validated by the spam filter on my email inbox which captures over 500 messages a day now. Facebook lets you control who sends you messages and who you communicate with. It’s a closed world in which the user has more control.
LinkedIn is a business networking site that let’s users select who they want to connect with. I have over 400 connections now, and over one million contacts only three degrees of separation away. The problem with LinkedIn is that aside from connecting, there’s not much else to do on the web site. How long do people really hang out at the LinkedIn site? It’s log in, take care of business, and log off.
A small eco-system will continue to spring up around these social networking sites. Investing in them is a zero or a one. You either hit it big or you lose it all. It’s those huge payoffs you read about in the news that keeps entrepreneurs pursing what I call the “high tech lottery.”
Best regards,
Hall T.
Matt believes that Facebook is the new AOL for the twentysomething generation. For those who don’t remember, AOL was started as a community site to connect with friends and family and there was plenty to do on the site. AOL later in life changed to an advertisement model and became just another “channel” on the web. Matt indicated that the twenty something generation and younger communicates either through Facebook or through text messaging. The email system that the older generation uses is too open. Anyone can send you an email message. This is validated by the spam filter on my email inbox which captures over 500 messages a day now. Facebook lets you control who sends you messages and who you communicate with. It’s a closed world in which the user has more control.
LinkedIn is a business networking site that let’s users select who they want to connect with. I have over 400 connections now, and over one million contacts only three degrees of separation away. The problem with LinkedIn is that aside from connecting, there’s not much else to do on the web site. How long do people really hang out at the LinkedIn site? It’s log in, take care of business, and log off.
A small eco-system will continue to spring up around these social networking sites. Investing in them is a zero or a one. You either hit it big or you lose it all. It’s those huge payoffs you read about in the news that keeps entrepreneurs pursing what I call the “high tech lottery.”
Best regards,
Hall T.
Wednesday, October 17, 2007
UT Venture Fellows program – A Great Learning Experience
I met with Jim Nolen the other day and he updated me on the UT Venture Fellows Program. Venture Fellows are recruited from the UT MBA program for a two semester course. Twenty candidates are nominated and elected to the program by the alumni of the previous Venture Fellows class. Members get the opportunity to work in various capacities at VC firms such as performing due diligence, market validation, developing an M&A package for a company’s acquisition and more.
I was then invited to give a talk on angel investing to the group and found the audience intrigued with the prospect of working with angels in addition to venture capitalists. In my talk I highlighted the fact that angel investors in aggregate invest more than VCs. The VCs are just better at PR than angels since angel groups are more fragmented. There is a shrinking number of VCs but a growing number of angels and angels groups in the state of Texas. Startups need less money today and than previously due to increased efficiencies in business due to outsourcing and other factors.
I was impressed with the program as it provides real, hands-on experience to students before they graduate. As we know from working with startups, that is sometimes the difference between success and failure.
Best regards,
Hall T.
I was then invited to give a talk on angel investing to the group and found the audience intrigued with the prospect of working with angels in addition to venture capitalists. In my talk I highlighted the fact that angel investors in aggregate invest more than VCs. The VCs are just better at PR than angels since angel groups are more fragmented. There is a shrinking number of VCs but a growing number of angels and angels groups in the state of Texas. Startups need less money today and than previously due to increased efficiencies in business due to outsourcing and other factors.
I was impressed with the program as it provides real, hands-on experience to students before they graduate. As we know from working with startups, that is sometimes the difference between success and failure.
Best regards,
Hall T.
Monday, October 15, 2007
Attracting Angels Seminar – It’s All About Networking
I had the pleasure of speaking on a panel this morning hosted by the Austin Business Journal and Fish & Richardson on the topic of “Attracting Angels”. On the panel with me was Fred Stowe of Order Corner -- a company in which CTAN made an investment, and Steve Vandegrift, a long-time member of the entrepreneur/investor community. Kin Gill moderated the discussion.
Steve vocalized what many in the investment community already know – VC funding in Austin is almost gone. The funds in the 1990’s have invested their dollars and are now trying to make their portfolio companies work. Rudy Garza has G51, Brian Smith has S3 Ventures, and there is Austin Ventures, but that’s about it. Most of the deals are now angel deals anyway. What used to take $5M to startup a company can in many cases be done with $500K due to the cost of business going down thanks to the web, email tools, outsourcing, and the like.
Angel investing is back in a big way. They run in five to seven year cycles, and a new cycle was kicked off in 2006. I attended the Angel Capital Association meeting in 2006 in which there were 150 of us attending. This year, the same ACA conference had twice as many people. Across the board, angel groups are seeing a resurgence in membership and dealflow. Certainly, the Central Texas Angel Network is seeing a surge in membership and deals. We get about 30 deals a quarter submitted to our site.
Fred Stow echoed the comments of Steve and highlighted the need to network to find funding. He also mentioned that in his experience the angel groups in Austin, Dallas, and Houston, each had unique characteristics. Dallas is focused on retail, Houston on energy and biotech with a leaning toward “old money” and Austin towards more eclectic deals with risk. Each angel group has its personality and should be taken into account when looking for funding. An angel should bring more than just dollars to the table. An Angel should bring contacts and expertise as well.
In submitting deals to the Central Texas Angel Network, we look for investment by the founder – just to ensure “skin in the game.” On software deals we also look for market validation. It’s hard to talk about business models when you don’t have any customers. There has to be some vetting of the business model in order to get traction with investors. The costs of acquiring/supporting a customer as well as the revenue from that customer are important to know before seeking an angel.
Most angel groups seek deals that are raising at least $200K. We rarely see deals like this. Most are seeking at least $500K. The audience asked about “baby angels” in so far as are there people who will invest in deals that are lifestyle businesses? While there are not official groups for this type of investor, there are individuals who like these deals. It’s all about networking.
Best regards,
Hall T.
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