Networking With Investors 2009 By Hall Martin Austin Entrepreneur Network

Networking with Investors
Sources – Networking – Personal IP

Raising Angel Funds
Deals raising $2M or less
Strong management team
Focused Go-to-Market strategy
Seeking 3 to 5x return in 3 to 5 years

Raising VC funds
Deals raising $2M+
Large target market
High dollar per sale

Emerging Technology Fund
Grants
Commercialization
Research Grant Matching
Requirements
Tie to a Texas University
In target research area
Workshops Available
RCIC—Regional Center for Innovation & Commercialization

SBIR
SBIR Qualifications:
Technology-based companies
American-owned and independently operated
For-profit
Principal researcher employed by business
Company size limited to 500 employees
SBIR Setup
Each Dept. runs own SBIR
DOD (easiest) to NIH (hardest)

SBIR Cont.
Phases
Phase I: $100K (6-9 months)
Phase II: $750K (2 yrs)
Phase III: No limits on funding or duration (not funded by allocated set-asides)
Reality Check
Takes 40 hours to complete a Phase 1 proposal
Only 15% of submitted plans for Phase 1 are accepted
33% of Phase 2 plans are accepted

Other Sources
Family/Friends/Founders
Angels will expect you to tap these first
Debt financing
Lend $100K to $1.5M
Need collateral or personal guarantee
Purchase Order financing
Equipment Financing
Equipment serves as collateral for loan
Factoring-- Selling the Accounts Receivables
Micro lenders
- $15 to $150K loans

Motivations of Angel investors
Do a little good, have a little fun, make a little money.

Different Type of Angels
Marriage partner—in for the long haul
Networker—industry knowledgeable
Executive recruiter—management specialist
Therapist—CEO coach
Strategic partner--specialist
General utility player—jack of all trades
Fund raiser—knows where the money is
Source: “Every Business Needs an Angel” John May

Top Mistakes by Entrepreneurs
1.   Not Knowing Your Market and Customer
2.   Not Considering Your Competition
3.   Overstating Business Progress
4.   Being Resistant To Additional Management
5.   Insisting That You Are Right
6.   Not Knowing What You Will Do With the Funds
7.   Misrepresenting Financial Status & Not Disclosing Material Facts

What Angels Look for in Deals
Management is seasoned and capable
Proof of Market
Compelling Competitive Advantage
Realistic Financial Projections
Intellectual Property
Scalability
Passion
Coach ability
Broad Platform
Existing, mature distribution system
Return on Investment

How to Get in Front of Angel Investors
Become the expert in your space and give speeches and workshops on the topic
Participate in Fastpitch Competitions –- stand and deliver
Join groups where investors gather
Ask entrepreneurs for introductions to investors

Know who’s in your network
Look for those who can help beyond just funding
Create visibility for yourself
Be clear about what you need
Know your market, product, and customer better than anyone else
Keep the pitch positive – don’t complain about hard it is

Build a relationship
Take them with you on the “journey”
Invite them to your Board of Advisors
Keep them informed of your progress with regular communications
Demonstrate ability to execute

One Final Thought
Your startup has Intellectual Property (IP) but . . .

Your Personal IP
What is your Personal IP?
What do you bring to the table that no one else is bringing?
How does this help your startup?
How can this help your investor?

Discussion
Hall T. Martin
Austin Entrepreneur Network
director@
austinentrepreneurnetwork.org512-656-9487