Finding an Angel Investor in Texas
March 24, 2016 | By Kevin Vela
One of the most common questions I get from my startup clients is, “Can you help me to find investors?”
The answer is always a very lawyerly, “Well, yes and no.” I generally hate it when people say that, but it’s an honest answer.
First of all (and I’ve written about this before), if you’re a baby startup, you should be able to raise $50k – $100k on your own. That’s simply the expectation around Texas. This money should come from your own savings, friends, family, and your personal network. If you can’t get the people who know you the best to invest money, or if you’re not willing to put your own money into the company, how would you ever expect a total stranger to invest in you? Let’s be clear, when people invest in a startup, especially early-on, they are investing in you, not the idea. Angel investors want to see that people around you believe in you enough to put their hard-earned cash up. VC’s, when you get there, will want to see that Angels have vetted and invested into your company.
So if you haven’t yet raised any money on your own, the likelihood of VW introducing you to someone who wants to invest is slim to none. And I’m pretty sure that any law firm would tell you the same.
If, however, you have done that initial friends and family round, the next step is likely an Angel network. We’re blessed in Texas to have a host of active angel networks. I’m gonna list them here and encourage you to reach out to them to see what their pitch steps are. Some of them charge to apply, which some people don’t like, but I don’t have a problem with it. It’s usually a nominal fee and those things aren’t free to run. I’ve seen all of the groups below invest into clients of VW, and believe in them.
In alphabetical order:
- Aggie Angel Network
- Baylor Angel Network
- Central Texas Angel Network (one of the most active Angel groups in the country)
- Dallas Angel Network (Sammy Abdullah and I founded this group; it’s not a formal group, but we try to do 3-4 pitch meetings per year)
- Lone Star Angels
- Houston Angel Network (these guys are very, very sharp)
- North Texas Angel Network (been around forever, very experienced guys, they love to get hands-on)
- The Alliance of Texas Angel Networks (it has a few more whom I haven’t worked with in the past)
Now, once you’re past the Angel stage, you are likely ready for a VC, or close to it. We keep a rolodex of VCs around the country who are looking for deals in certain industries. Ask your attorney or CPA for similar introductions. And don’t be afraid to cold-call them. It’s their job to review decks.
A few tips on VCs:
- Reach out to them before you are ready for them. “Hi, here is what we do, we just a raised a seed round and are going to accomplish XYZ in the next 6-12 months, is it okay if I send you monthly updates to show you we’re on pace?”
- The best time to ask for money is when you don’t need it. This is obvious, but there’s nothing more attractive than a startup who can say, “Nah, we don’t like those terms and aren’t starving for cash, so we’ll pass.”
Posted in Funding & Capital Raising, Startups
Kevin Vela is the managing partner at Vela Wood. He focuses his practice in the areas of venture financing, mergers & acquisitions, corporate law, capital raises, and real estate investment activities. You can see Kevin’s attorney profile HERE.