Bonnie Arbittier / Rivard Report
The flurry of business cards exchanging hands Friday at Hotel Emma reflected the keen interest of angel investors from across the state at the Alliance of Texas Angel Networks Summit 2017. The nonprofit Alliance of Texas Angel Networks (ATAN) was created in 2012 to foster the growth of start-up activity in Texas, with 13 angel network groups across the state.
An angel network is a group of angel investors who organize together to facilitate investing. High-growth startup companies looking for less than $1 million in total funding are typical candidates applying for angel investment. Angel investors, in turn, look for increased deal flow and cooperation with other high net-worth individuals.
San Antonio’s Angel Network (SAAN), first organized last September, hosted the summit. More than 50 ATAN investors traveled from locations across Texas to attend the event.
“The summit is an opportunity to showcase San Antonio and offer a great experience for our 65 investor members to meet other ATAN investors,”SAAN Executive Director Chris Burney said.
Founding members of the San Antonio Angel Network include the Geekdom Fund’s Michael Girdley; former Rackspace President, TechBloc founder, and venture capitalist Lew Moorman; Filestack’s Pat Matthews; Intrinsic Imaging’s Amit Mehta; NBA-TV commentator and former San Antonio Spur Brent Barry; FlashSCan3D engineer Cole Wollak; and Geekdom CEO Lorenzo Gomez.
Before the formation of the San Antonio Angel network, San Antonio startups had to rely on individual venture capitalists or sources like the Geekdom Fund to find investors, Burney said.
“San Antonio’s Angel Network has an affiliation with other angel groups [in the ATAN network] to facilitate angel funding across the state,” Burney said. “In our monthly calls, we share updates on specific deals. If a company needs investors, we can share deals and put together a coalition of investors across the different angel networks via syndication.”
The various angel groups in Texas operate independently, yet have opportunities to invest in a deal proposed by another affiliated angel group within the ATAN network.
“Our goal is to fund high-growth companies that come to our member angel groups,” said ATAN chair Jamie Rhodes. “One rule we have is that the member angel group needs to invest in a deal proposed for syndication.”
When angels make an investment, they become an owner of that company, Burney said. While angel investors typically do not serve on the board, they do have a stake in the company, often acting as mentors for startup company founders.
“Angels are a specific breed of investor,” Burney said. “They want to be involved with entrepreneurs because they have a philanthropic interest in investing, offering mentorships, sharing best practices, and guiding the entrepreneur on how to build a successful company.”
San Antonio’s startup ecosystem will be getting more attention, especially once Jorge Varela, executive vice president of the nonprofit Texas Research and Technology Foundation completes his move from Fort Worth to San Antonio. Through his work at TRTF, Varela focuses on innovative bioscience and biotech ventures for the commercialization of new technologies.
“We feel that San Antonio’s startup ecosystem is growing and achieving a critical mass,” Burney said. “We have lots of deals in our pipeline for biosciences as well as tech. Cybersecurity is also growing here, and we think there will be lots of great investable products in that market space soon.”
Burney pointed out that the angel network is "industry agnostic," or interested in investing in viable startups regardless of specialty.
During the afternoon break, Kelli Koehler, founder of Wildway, a grain-free breakfast and snack foods company, spoke with attendees and handed out granola samples. The San Antonio company has been in operations for four years, has products in more than 700 stores across the U.S., and is working with SAAN as it seeks its first round of funding.
Barry, who emceed the morning portion of the summit, was enthusiastic about the network’s role in fostering local entrepreneurial development.
“The first event was at my house,” Barry said. “I joined because I was impressed by what board members like Michael Girdley and Pat Matthews are doing around town.
“The [San Antonio] Angel Network’s mission statement – to help local entrepreneurs get on their feet – excites me and makes me want to be a part of that effort to grow the ecosystem locally.”
SAAN is actively recruiting new angel investors. Those interested can click here.
“Angels don’t invest in ideas, they invest in companies,” Burney said. “For the many good companies here, we want to make sure they have access to capital and that investors have access to opportunities as well.”
Downtown real estate developer, co-founder of Rackspace, and philanthropist Graham Weston is one example of how an angel investor can make a positive impact on the local startup ecosystem and surrounding community, as he did in San Antonio.
Weston's goal is for San Antonio to build an ecosystem that can foster "the next Rackspace." He said co-working spaces like Geekdom and incubators like RealCo Accelerator allow people to get started quickly by creating communities of like-minded entrepreneurs.
The ways investors can impact their communities and help build ecosystems includes creating an exciting city that will attract a young workforce and help grow its entrepreneurial base.
"The Millennial generation is looking for a city to live in first and a job second," Weston said in the summit's closing keynote session.
With the cost of living so high in Silicon Valley, the option to move to San Antonio makes sense for companies looking to scale their business. Other advantages are more qualitative.
"I think that what we have is our own set of advantages, a much more loyal workforce," Weston said. "There are still opportunities to be somebody in our ecosystem. Each new startup really matters to us."