As developers, entrepreneurs and job-seekers descended on downtown Austin this week for Austin Startup Week, sessions on startup funding drew interest from founders and those hoping to launch startups.
At the “Entrepreneurs Workshop” by the Central Texas Angel Network, or CTAN, angel investors discussed the importance of founders having a clear story and being prepared for a rigorous due diligence process as they scale up their business.
The workshop featured three founders who’d secured angel funding through CTAN.
One of them, Doug Donovan, CEO of Interplay Learning, which provides VR-based trades training, said he first sought angel funding through CTAN in August of 2015. A splinter group was willing to invest in Interplay outside of the formal CTAN process, but Donovan said it wasn’t the right opportunity.
Then, in April 2016, Interplay landed a $1 million angel deal from CTAN and Tech Coast Angels. The difference on his second try, Donovan said, was that he showed an improved ability to communicate the company’s addressable market.
“You might have a lot of really good things going—your technology, your team—but if you don’t have all of it, and you’re not able to communicate effectively, which is a different skillset than running a business, then it’s hard to (succeed),” he said.
Jean Anne Booth, CEO of UnaliWear, which is developing a smartwatch for medically vulnerable populations, also landed angel funding from CTAN on her second try.
“The blessing of being an entrepreneur in Austin is that we have CTAN, which is the most active angel investment group in the U.S.,” she said. “The curse of being an entrepreneur in Austin is that we have CTAN, which is the most active angel investment group in the U.S.”
CTAN’s sophistication means that startup founders may need to be further along in their business to impress angel investors, Booth said. UnaliWear needed several millions of dollars to produce their Kanega watch, and it’s often hard to get capital without demonstrating traction.
UnaliWear’s 2015 Kickstarter campaign raised $110,000, but more importantly, Booth said it showed traction and market potential to investors.
Booth started the company to find ways to help her senior-aged mother gain independence with dignity, but she said the Kickstarter campaign reached other other vulnerable populations, including disabled veterans and those with serious diseases or physical disabilities. That reach proved to investors that her product could be used beyond the senior market.
Raising money, however, is not always necessary for startupus, other panelists said. During VentureCrush ATX’s Wednesday evening panel on growing a startup, local entrepreneur Hemi Thaker shared how he grew two startups to acquisition without raising any angel or venture funding (but not for lack of trying, he joked).
“You can either raise money or go get customers,” Thaker said. “Raising capital requires you to have people buy into your vision, and you’ve got to articulate that. Deep down, we could have done that, but I felt much more confident going after customers.”
Surveying the crowd of hopeful entrepreneurs at Capital Factory, Thaker added, “being an entrepreneur is a roller coaster. If you want to be an entrepreneur, you’ve got to be willing to fail. One of my slides said you got to fail fast and not be married to an idea.”
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