Support of Under-represented Founders
The Southwest Angel network is welcoming to companies with diverse founding teams. We think of diversity in terms of teams with a C-level, co-founder with a significant equity position, where that co-founder is from a group that historically been under-represented in terms of access to funding, typically female and/or persons of color.
Our network gives all teams equal access to funding. Having a diverse team is neither required nor sufficient to receive funding from our network. Half of our portfolio companies do not have an under-represented founder.
That said, our network aspires to have at least one team with an under-represented founder be selected to present at our quarterly dinner pitch events. On occasion, all the selected companies have had such a founding team.
You might assume that social-impact investors will be satisfied with a lesser financial return than investors can earn in other angel networks. After all, supporting social-good reminds us of philanthropy. The Southwest Angel Network believes that in order to have the biggest social impact, it needs to attract the largest possible number of angels. How do we do that? By combining significant social impact and strong business results.
Here is a big hint. All of your projections (revenue, the rate of customer acceptance, cash burn and otherwise) should be based on your best understanding of the most probable outcome, i.e., your current understanding of reality. Leave inflated projections at home if you want to maintain your credibility and get funded.
In order for your company to be successful in raising funds from us, you must convince the investors of two major things:
- Your primary business mission is to address a significant societal challenge. If impact is a secondary or optional effect, or if impact is not your primary business mission, your company is not a good fit for our investors.
- Your business has a convincing path to profitability. Among the important factors leading to profitability is the fact you solve a truly significant or painful problem for customers who have a budget to pay for a solution to that problem. Your potential customers respond to your company with “we must buy your solution“. A “nice to have” response is not generally fundable. Don’t confuse paying customers with impact beneficiaries. They may be different.
Your pitch deck should closely follow the Investor-Presentation-Outline.
The Southwest Angel Network Impact investors strongly prefer:
- Companies with a strong management team which has significant experience in the market segment that they are attacking
- Early-stage companies that have gone to market and achieved some degree of traction or revenue. This is an important criterion since most of the other angel networks that we will work with to syndicate funding for your company will require early traction/revenue. If your company is pre-revenue, you are expected to have completed world-class market validation.
- Companies that expect to achieve significant annual revenues within the next five years.
Investment decisions are made by individual investors; the network does not have an investment fund.
The network runs four funding cycles per year. We don’t consider investment opportunities outside of these funding cycles.
The Southwest Angel Network is generally funding stage agnostic and has invested in the past from pre-seed through series B.
The Southwest Angel Network is open to a range of investment instrument types, including:
- Convertible debt or equity for companies that we believe will achieve a significant exit via acquisition or IPO.
- Revenue-based financing or other debt instruments for companies that we believe don’t have the potential for a significant exit. The amount of investment dollars available with revenue-based financing is typically 25% to 33% of the annual revenue rate.
For foreign-resident companies to be eligible to apply, they should have specific plans for entering the US market, and agree to have a qualified, senior executive of the company heading up its US operations and resident in the US, preferably in Texas.
We run a quarterly funding cycle, with an application deadline every quarter,
Down-selection step one: Based upon the submitted application forms we select 6 to 8 companies to present to a down-selection panel via zoom.
Down-selection step two: The zoom calls includes 15 minutes to present followed by 45 minutes of Q&A. Based upon the zoom calls, the down-selection panel selects three companies to present at a Dinner Pitch Event.
Dinner pitch event: your company will be given 15 minutes to pitch followed by 15 minutes of Q&A.
Deal Memo Development: Based upon feedback from the angels at the dinner event, companies may be invited to enter into a detailed due diligence/deal memo step. When the deal memo is complete, it is circulated to all of our angels who then make individual investment decisions.
You can see the quarterly schedule for this process in the Calendar.
How to Apply
Companies may apply twice within any twelve-month period.
There is no charge to apply for funding.
Our network does not accept applications through Gust or ProSeeder.
We do not accept any material containing Confidential or Proprietary legends.
If your company is accepted to pitch at an in-person quarterly dinner pitch event the CEO is required to attend the meeting in person unless other arrangements are agreed to at the time that you apply. At the current time all pitch events are virtual.
To apply your application, download and review the four files discussed below.
Then email your application to email@example.com, including:
- Your completed application
- Your pitch deck which includes our suggested content, as described below
- Your signed application agreement.
Files to be downloaded:
- Application Form 2020-05-20 – Please submit in Word document or as a pdf. (We don’t have tools to easily open Apple or OpenOffice formats).
- Application agreement – which states that:
- if funded, your company’s will provide quarterly reports to Southwest Angel Networks investors on your business progress, financial results, and social impact,
- only non-confidential information is being supplied by the company to the network during the application process, and
- your CEO will present in person in Austin if your company is selected for a non-virtual dinner pitch event.
- Investor-Presentation-Outline – pitches that deviate widely from the recommended form typically don’t fare as well in our down-selection process. Please submit in a PowerPoint or pdf format. (We do not have tools to easily open Apple or OpenOffice formats, and we do not accept pitch decks available only online, for example using tools such as SlideBean, Slide Rocket, Prezi or Sway).
- example-P-and-L which shows the general form of what we would like to see in your pitch deck financial slide. We don’t need to see a slide that is simply a graph of revenue growth.
Please contact Bob if you have any questions: (512) 658-2240 or firstname.lastname@example.org
The deadline for applying for our 3rd quarter funding cycle is the end of the day on Friday, July 31st
COVID-19 Update for our 2nd quarter May 2020 pitch event: The SWAN Board of Directors’ first priority is for the safety of those involved with the network’s activities. Therefore our May meeting will be virtual event.
Our network of investors looks for for-profit enterprises that can become profitable while solving significant societal challenges.
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