Top 5 Tips for Receiving Investment from the Houston Angel Network
As the 3rd most active angel network in the U.S. in 2013 with 33 deals and $9.3 million in investment, HAN continues to expand its investment capabilities. For 2014, excluding Q4, they have exceeded their 2013 investment numbers with 47 deals and $13 million invested. So how do you peak the interest of the Houston angels to invest in your startup?
We talked with Juliana Garaizar, the Managing Director of HAN, to get a better look into what the HAN angels are looking for:
- Team. They want founders with experience working at previous startups, or an industry expert to prove you have what it takes to have a successful company.
- Large Market. Your market should be big enough and growing with well thought out estimations.
- Sustainable Competitive Advantage. Mitigate the risk for your product and understand how your competitors are tackling the market is a key proponent to assure angels your product is viable and will not fade over time. Adding intellectual property or protection will add great value, and having a prototype or beta of your product to further de-risk the investment.
- Business Model. Make sure your financial summaries and projections are sound, this includes your “Go to Market Strategy” and how you plan to make money.
- Exit Strategy. Have an exit strategy with a great return will better your chances for investment. The average time HAN expects to see a return on their investment is five to eight years, although they are very happy if it takes less time to see a return on their investment.
Currently, the main four industries that HAN most invests in are Energy, Life Science, Consumer Goods, and IT. Within each industry there are sub-interest groups that focus on the digital and IT side, such as Energy Tech or Digital Health.
There are multiple ways to meet these said angel investors. They frequently attend community events hosted here at the Houston Technology Center, START Demo Day, Rice Alliance, SURGE, Red Labs, Owl Spark, and many more. It is always a good idea to try to meet the angels and receive feedback before applying to HAN. This can add extreme value to your company and establish further credibility. In any case if you apply directly to HAN, you will be assigned an investigator to lead the vetting process.
To close, Juliana explained, “2014 will be a record year for us with at least $13 million invested compared to the $9.3 million of 2013. I don't know if we will be able to keep that rhythm in 2015, but if I had to choose, I would select quality of deals instead of quantity. We need to make sure our deal flow quality keeps improving to ensure good exits in the future.”