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TECH Fort Worth’s angel group flying high

Fort Worth Business Press
Dubbed Cowtown Angels, the new springboard for area entrepreneurs recently welcomed its 16th investor and is drawing an increasing number of wealthy folks looking for ways to diversify their money. In the past six months, members of the Cowtown Angels have screened more than 20 innovative startups and have made investments totaling about $700,000 in two local companies, PerioSciences LLC, a researcher and marketer of antioxidant-based oral care products, and Natural Dental Implants Inc., which manufactures a nonsurgical tooth replacement system.

The group has completed due diligence on two other area companies and is close to making deals. “It’s happened faster than I expected. I guess I thought it would be a harder sell than it’s been,” Ryan said. Celebrating its 15th anniversary, TECH Fort Worth fulfills its mission to grow the local technology-based economy by helping entrepreneurial businesses bring their products to market. Ryan said Cowtown Angels is a continued expansion of the incubator and was created, in part, to improve opportunities for startup companies to attract capital while helping stimulate the local economy. “We saw a gap in what people call the entrepreneurial ecosystem. We saw people with money and experience in the community and we had all these startups and saw that gap between them,” she said. “Clearly the need is there. Clearly there are people in the community who want to help startup companies; they want to invest in them. They have the money, they have the time, they have the right motives; they enjoy this. They just didn’t know how to connect with these startup companies.” Like other angel groups, members of Cowtown Angels and entrepreneurs meet regularly – in this case at monthly forums – to hear pitches from a variety of startups. Many of the financial backers are entrepreneurs themselves as well as corporate leaders and business professionals. Individuals who invest their cash in these high-risk, illiquid emerging firms must meet accredited investor qualifications required by the Securities and Exchange Commission. In return for their investment and annual dues, angels receive equity in the startups and often are placed on the companies’ oversight boards, giving them day-to-day involvement in their investments.

Not only does the program introduce the angels to the entrepreneurs but it also coaches and mentors those entrepreneurs through the process of securing funding. “Angel investing is about making money, but there’s also something for these people wanting to do good for Fort Worth and help get more companies started here. They see that benefit. It really is a dual motive for them, which is what we hoped for when we created it,” Ryan said. Growing trend The Cowtown Angels program – one of 10 such networks scattered across the state, including the Texas Open Angel Network, Central Texas Angel Network, Baylor Angel Network and Dallas Angel Network – is one of the fastest growing members of the Angel Capital Association. The ACA is the North American trade association of angel groups and private investors. Part of a nationwide trend of angel networks, Cowtown Angels is also a member of the North Texas Angel Network (Ryan helped organize NTAN five years ago) and the Alliance of Texas Angel Networks, which allows Texas companies to more easily seek funding from the statewide angel groups. Cowtown Angels also recently signed a collaboration agreement with Golden Seeds, a national angel network that invests in startups primarily owned by women. “This is definitely growing, it’s definitely a trend. Investors are looking for alternatives and networks like Cowtown are helping fill that need,” said Michael Sherrod, the William M. Dickey Entrepreneur in Residence at Texas Christian University’s Neeley Entrepreneur Center. Sherrod is a member of both Cowtown Angels and NTAN. “This is beginning to emerge and mature and help all kinds of entrepreneurs and early-stage companies, not just technology or bio-entrepreneurs. It’s becoming really robust,” he said. Bekah McCarley, a graduate of TCU’s entrepreneurship program, is the Cowtown Angels program manager. As a TECH Fort Worth intern the past two years, she helped to plan and start the Cowtown Angels program. Although still in its infancy, Cowtown Angels has already given birth to an initiative that McCarley and Sherrod hope will bring future generations of both angels and entrepreneurs to the program and to the local community.

In collaboration with TCU, the angel network has launched the Cowtown Angels Scholars program. Four students – three undergraduates and one MBA student – were selected for the inaugural effort. The group attends monthly meetings and assists angels by working on due diligence projects. “It keeps the students motivated, is an educational experience for them and it gets the angels what they need,” Ryan said. “We’re helping raise that next generation of entrepreneurs to understand what angel investing is, and after they successfully sell their companies they’ll successfully start the next generation of angel investors.” Sherrod described the program as an eye-opening, real-world experience for the students. “This program gives them a great opportunity to see how investors determine the risk, how CEOs approach investors, and to see what investors are interested in,” he said. “It gives them a chance to network with CEOs and people they would not have had the chance to meet.” TECH Fort Worth will present its fifth annual IMPACT Awards on May 17. The awards are designed to increase awareness about entrepreneurial activity in North Texas. They are granted to early-stage businesses commercializing innovative products or services that will have a significant impact on the environment, health care and the community. The awards also raise funds to support business incubation programs for technology-based entrepreneurs. This year, for the first time, award finalists will be given the opportunity to pitch their companies to local investors. To give the Cowtown Angels Scholars more visibility, the group will host an IMPACT Angels event on June 20 at TCU. The Fort Worth band Green River Ordinance is scheduled to perform at the event. On the Web: www.techfortworth.org or www.cowtownangels.org