Members of CTAN, a nonprofit organization of more than 150 accredited angel investors, invested more than $13.3 million into 43 startups last year. Of those, 20 were new investments and 23 were follow-on investments into existing portfolio companies. With these investment totals, the group increased its funding activity by 30 percent over 2014, though annual investment dollars dropped slightly from a high of $14.6 million in 2014. In addition, the CTAN portfolio achieved seven exits in 2015, almost doubling the group’s total exit activity since its founding in 2006.
Over the past 10 years, CTAN members have invested more than $68.4 million into 127 companies. Its top three investment industries are Information Technology and mobile software, life sciences, pharmaceutical and medical devices and consumer products, food and beverage. CTAN runs five funding cycles a year and the next deadline to apply is May 16th.Claire England, CTAN executive director and Rick Timmins, board chair of CTAN, recently answered a few questions about the organization’s activity. The two jointly answered the questions by email.
Q. SHN: What were the top five investments for last year?
A. HUVRData, Ortho Kinematics, Phunware, Savara Pharmaceuticals, Xeris Pharmaceuticals. The last four listed were follow-on round investments for CTAN portfolio companies.
Q. SHN: CTAN had seven exits in 2015 – what companies had an exit?
A. Boxer, Deep Eddy Vodka, Fantasy Sales Team, Mahana, Mustang Valley Real Estate, Texture Media, Verb Products
Q. SHN: The investment dollars dropped in 2015, what does this indicate?
A. We can’t say for certain, but we do have a some thoughts on this… First, our single largest investment ever made in a company at one time was in 2014 ($3.1 million). This made 2014 a record year; yet, when we look back over the last five years, we show a significant upward investment dollar trajectory, and 2015 continues this trend.
Second, because our members invested in so many more companies than in previous years, it’s possible that affected the overall total investment dollars slightly. Essentially, our members spread their capital across a higher total number of startups in 2015, which we think is an even better outcome for our entrepreneur ecosystem.
To dive into the numbers further, the $13.3 million in 2015 still eclipsed the years prior to 2014 by a significant amount. For instance, the 2015 investment total represents a 37% increase over 2013. Simply put, the $14.6 million in 2014 was an outlier for CTAN with the largest-ever investment of $3.1 million into one company, while our overall investment growth remains very strong. Here’s the history from the past five years:
140 member investors
120 member investors
112 member investors
95 member investors
60 member investors
Q. SHN: What was the average investment size?
A. Our average investment size in 2015 was $363,000.
Q. SHN: What kind of startup is CTAN seeing as the most active?
A. We are seeing considerable variety in the type of startups in which members are investing. We have significant interest in both first-time CEOs and experienced CEOs; plus, diversity in seed-stage companies versus follow-on investment companies. Most of the companies are based in Central Texas, though we’re seeing increased deal flow from across Texas and even out-of-state.
Q. SHN: Is there any particular industry that is doing better than others?
A. We’re happy to say things look good across a variety of industries. We have an incredible diversity of experience in our membership base across multiple sectors, and it is reflected in the fact that in 2015, CTAN members invested in 12 different verticals.
Q. SHN: What would CTAN like to see from entrepreneurs in 2016?
A. Although funding is one of our principal activities, we also provide significant mentoring and advice to entrepreneurs pre-funding. We would like to see more entrepreneurs take advantage of this opportunity, especially by attending the Entrepreneurs Workshop that we provide to companies coming through each funding cycle. We strongly believe that mentoring and advising can improve outcomes, not only in terms of completing funding but also in long-term organizational success for startups.
Q. SHN: There’s been a lot of talk about a funding shortage in Austin for startups. What is CTAN’s opinion on this? Do your startups have trouble raising additional funds after the first stage from investors?
A. We have a policy to welcome back startups for further follow-on funding once they have received a seed investment from CTAN. These are our portfolio companies, which we seek to support in a number of ways, in addition to follow-on funding. Many of our portfolio founders take advantage of this funding opportunity. In fact, more than 50% of our funding in the last two years has been devoted to follow-on round investing for CTAN portfolio companies.
However, that said, there is still a shortage of capital in the Austin market as entrepreneurs attempt to raise funds beyond the early-stage rounds on which CTAN is focused. This has even been documented by a study released last year of funding in major metropolitan communities, including Austin.
Q. SHN: Anything else you would like to add or make a point of?
A. We think the best way to keep our momentum of increased investment activity going in 2016 is by growing our membership on an even more significant scale than in past years. We intend to do this by letting potential angel investors know about our strong deal flow, structured funding cycles, and first-class due diligence. We have an education program with topics and tools for investors of all experience levels; plus our member orientation and experienced mentors make it easier for those less experienced in angel investing to get started. The more individuals, couples, family offices, and investment groups that get involved in CTAN, the more capital we can deploy in seed-stage funding in our region.