How to Tap into Austin’s Investor Landscape

By SUSAN LAHEY
Reporter with Silicon Hills News

Austin skyline at golden suntrise reflected in Ladybird Lake, photo licensed from iPhoto

Austin skyline at golden suntrise reflected in Ladybird Lake, photo licensed from iPhoto

According to the PWC Money Tree, Texas was the sixth highest investment region in the country in 2013. With $1.3 billion invested it was a small player compared to Silicon Valley’s $12 billion in investments. A fact that continues to gall Austin’s startup community. The good news for startups is that, in a lot of ways, Austin is still a small town which means it’s easier to meet investors here than in it is in many markets. Angels and venture capitalists attend pitch competitions, Startup Week events, SXSW and even crazy things like Startup Olympics. But even in Austin, walking up to an investor and launching into your pitch is considered a major faux pas.
We’ve seen founders walk up to investors who are three bourbons into a networking event and launch into a pitch. We’ve seen founders joining conversations and scattering participants like roaches by putting on their “sales” voices. We’ve seen founders looking at investors they just met like guys who have been at sea for a year meeting the first woman on shore. No.
Most investors want an introduction from someone they trust before they hear your pitch. In addition, while one investor admitted: “We want to find startups pretty much when they roll out of bed in the morning, before they’ve made too many mistakes” they don’t want to waste time with startups who have no business model, no idea how much it costs to acquire a customer, no revenue model, no sales strategy, no idea of their valuation, no measure of their competition and so forth.
So we’ve included a list of some of the leading area investors. Some of the kinds of companies they invest in, and rules they have about approaching them.

Central Texas Angel Network
Central Texas Angel Network is one of the top five most active angel investment groups in the U.S. CTAN angels come from numerous industry backgrounds and invest in companies from tech startups to consumer packaged goods. Many of them work with startups at the local incubators as mentors as well as investors.
CTAN has more than 130 members who are commonly spotted at pitch events put on by the University of Texas, Capital Factory, Incubation Station, Techstars and other startup institutions, usually looking for early stage companies to make seed investments. In 2012, the angel group invested $8 million in 25 companies. CTAN has quarterly “office meetings” to informally meet and pitch to investors to get feedback on their pitches. The group also has five annual funding cycles. Startups apply at the group’s website, and those that are accepted have the opportunity to pitch and get feedback from investors. An average investment for a single investor is about $25,000.

Austin Ventures
Austin Ventures is the largest firm in Austin with a $3.9 billion fund. Austin Ventures invests in both early stage and middle market companies AV Investors have been quoted as preferring to meet startups interested in pitching them through an introduced from someone they trust. Early stage investments range from Our investments typically range in size from $500,000 proof-of-concept projects and seed financings to $40 million venture growth rounds. $25 million to $100 million. Austin Ventures is a very hands-on investor. Among its portfolio companies are Bazaarvoice, RetailMeNot, Spiceworks and Spredfast.

LiveOak Venture Partners
A relatively new venture firm, LiveOak Venture Partners has expressed that it’s more open to early stage companies than some other investors. Partner Krishna Srinivasan said he doesn’t require an introduction and is interested in talking to a number of seed stage startups. Live Oak recently announced a $100 million fund for early stage companies. Its minimum investment is usually $250,000.

Silverton Partners
Silverton Partners is an Austin based company that mostly invests in tech companies. Though it has invested in several Capital Factory companies already, the company recently announced a partnership with Capital Factory whereby every Capital Factory accelerator startup with an initial $50,000 from two angel investors would receive another $25,000 from Silverton. This is on top of a $50,000 match from Capital Factory.
Generally, Silverton’s initial investments range between $200,000 and $2 million.

Triton Ventures
Laura Kilcrease, one of the managing partners of Triton Ventures, helped found Austin Technology Incubator and formerly served as Entrepreneur in Residence for the University of Texas Herb Kelleher Center for Entrepreneurship. She can frequently be seen at University of Texas pitch events and mentors many startups.
Triton focuses on spinout companies, including technology licensing spinouts, tech commercialization and early stage companies. Average initial investments range from $500,000 to $4 million. Triton also supports companies in its portfolio with additional investment and often introduces its portfolio companies to other investors.

Mercury Fund
Mercury invests in lean, early stage startups with small scientific teams and software based businesses. Initially the fund invests between $50,000 to $1.5 million and usually invests between $4 million and $6 million over the life of the company.

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