It feels as if you just stepped into the popular ABC reality television show Shark Tank. You glance around looking for Mark Cuban or Lori Greiner, but they are not in the room. There are no cameras, no directors, and no props. Then it hits you. This is real! This is Cowtown Angels, and it is happening in Fort Worth.
Since September of 2012, this network of early-stage investors, typically called "angels," has been meeting almost monthly to listen to pitches and make investments with a dual motive of creating jobs and wealth in our local community. The angel network is made up of 25 local high-net worth investors who have, as of March 2014, invested more than $3 million of their money in nine startups.
Like Shark Tank, entrepreneurs make it to the "Show" (called Forum here) to present their company and investment opportunity to the angels. Some are nervous, some much more composed and ready to stand their ground. To get to Forum, the company will have gone through pre-screening by the team at TECH Fort Worth, the non-profit that created and manages the Cowtown Angels program, and through the monthly screening, where up to five companies sell their ideas in eight-minute pitches.
On Shark Tank, screening is a job relegated to underlings, but at Cowtown Angels, it is actually angel members who listen to the first pitches. It is not uncommon to have 10 or 12 angels at a screening, all eager to discover a great startup and help champion their cause forward.
Angels come prepared, many having previous industry experience or, as successful entrepreneurs themselves, knowing the keys to business success. Some pitches disintegrate under the tough questioning. Presenters with limited understanding of their proposed market are flushed out. Entrepreneurs are shocked when the angels bring up competition they never knew existed or that they may have intentionally excluded for fear of not getting funded. Unrealistic forecasts are easily picked apart like white lint on the black suits of the CEO pitching. This is the heart of the funding system. Get by the screening, and your likelihood of being funded goes up exponentially.
The real action begins, however, after the companies have left the room. Unlike Shark Tank, where investors are viciously fighting to secure the best deal for themselves, angel investors collaborate to coax out the best investments. Debate amongst members may have one highlighting the company valuation as a driver to move forward while another may argue the market size is limiting growth. Executive expertise of the startup team always weighs heavily in these debates. Decisions are rarely quick or unanimous, but always end in general consensus by these extremely successful individuals. The process never ceases to amaze as the five hopefuls are narrowed to the two to proceed to Forum.
On the surface, Cowtown Angels and Shark Tank share the same spirit of connecting promising startups with talented and successful accredited investors. The differentiating factor: collaboration versus competition. Although each Cowtown Angels member invests independently, they collaborate to make educated investment decisions by leveraging each member's industry expertise and by pooling capital and valuable connections to diversify their portfolios and reduce their investment risk.
For example, a member who retired from a major pharmaceutical company utilized her experience to provide technical expertise in the group's largest single investment to date. In January of 2014, Cowtown Angels members invested $750,000 in Encore Vision, a company developing a prescription eye drop treatment that hopes to put an end to reaching for your reading glasses. The condition, called presbyopia, affects almost everyone age 45+.
Cowtown Angels is in its "Second Season" and promises to be long-running. Its stars, the startups and investors, may be relatively unknown in households today (most angels prefer anonymity), but the companies and products they launch may be tomorrow's Facebook, GE or Pfizer.
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