Monday, March 25, 2013

How long will it take you to get in front of 600 investors in Texas? A new angel-oriented crowdfunding platform says 90 days

Hall T. Martin, an Austin based entrepreneur with strong angel credentials, has established a new crowdfunding platform via his firm, the Texas Entrepreneur Network (TEN).  Martin serves as the Vice-Chair of the Baylor Angel Network and as the Director of the Wilco Angel Network.  Previously he served as the Director of the Central Texas Angel Network where he established the network and grew the membership to 50+ members with $5M invested in over 20 deals. Mr. Martin leads a program at the University of Texas in Austin on transferring university technology into successful startup companies.  He is also the Founder and Director of the Texas Open Angel Network, a 501c3 non-profit dedicated to the education of angel investors.

“There are two trends in the angel world that come together on crowdfunding,” says Martin.  “The first is that there are more deals than can fit into the funding forum model that angel groups use, so they have to start using the web to screen through the deals and determine investor interest.  The second trend is that investors don't want to pay fees up front but rather after they decide to invest in a deal.” 


What is crowdfunding? “It is finding investors through a web portal,” says Hall.  “There are four kinds of crowdfunding: equity, prepayment, loans, and donations.   TEN is offering equity-based or revenue-based funding deals to accredited investors.” 

We are doing this to close the distance gap in the state of Texas.  It’s a big state with many entrepreneurs and investors and we’re networking them together through the web.  It’s for Texas entrepreneurs and Texas investors although we may broaden it in the future.  We have over 600 accredited investors in the state of Texas in our database.  They are mostly in Austin, Dallas, and Houston, but cover the state. They include angel investors, angel groups, family offices, venture capitalists, private equity firms and more.  They look for a wide range of deals including early stage, growth stage, and revenue-based deals. 

So how does it work?  Investors login as “accredited” investors to see the deals.  If they want to learn more about a deal, they select the “I’m interested” button and we’ll line up a follow up call or meeting. Entrepreneurs who want their deal on the website to find investors submit an application.  Deals that we believe are fundable are accepted into the site. 
“We are not a broker/dealer so we don’t take commissions, success fees, or equity,” says Martin. We charge a flat fee to post on our site each month. For entrepreneurs it is $500/month (for at least 3 months).  It takes time to meet investors and build a relationship. For investors it costs nothing.

We help the entrepreneur with their documents (executive summary, pitch deck, and five year financials).  We mail to our investors on a regular basis about your deal. Investors interested in your deal will click the “interest” button and we’ll line up a conference call, webinar, or in person meeting.  If you stay in the program for more than 3 months, you are invited to join a funded cocktail reception or funding forum.

Benefits for Entrepreneurs.

So how long would it take  to get in front of 600 investors in Texas? The better question is that if you had access to over 600 investors, could you get your deal funded?

"But let's face the facts  - only 15% of entrepreneurs seeking Angel funding ever raise a single dime," says Martin. "Or, to put it another way, 85% of the folks who try to raise capital from Angel Investors fail."

In the past 3 years, we've helped Texas entrepreneurs  raise over 60 million dollars in Angel Capital ($60,000,000) through physical funding forums, personal introductions, profile promotions and more.

And now, through our crowdfunding platform, we're going to be able to spread the word about deals to more investors at one time and bridge the distance gap around the state.

To get the most out of this program,

  • First, entrepreneurs need to prepare for the raise.
  • Second, they need to give it some attention. They need to prioritize follow up meetings with investors.
  • Third, they need to be patient. It takes 3 to 6 months to find an investor, build a relationship, and close some funding.

About TEN.

The Texas Entrepreneur Network (TEN) is a for-profit that seeks to promote entrepreneurship through supporting entrepreneurs in the state of Texas.  We currently focus on helping entrepreneurs raise funding and find mentorship through the development of accelerators.  We have been helping entrepreneurs raise funding through physical funding forums over the past three years throughout the state of Texas.  In these events, 10 entrepreneurs pitch to a panel of 10 investors.  We are now extending our program to include crowdfunding.

We’ve helped entrepreneurs raise funding for the past three years in which our entrepreneurs have raised over $65M.  We run webinars on these topics on a regular basis. Readers of the Angel Investing News can find these sessions on the TEN website.

Martin, who makes his own wine, is also a member of the Wine Society of Texas

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