The Southwest Angel Network typically does not invest in the following. There can be exceptions, but the bar is high for getting funding for the following:
- Class III medical device companies, especially at the earliest stage of these companies. Both the risks and required capital are quite high.
- Investment funds. We prefer to directly invest in companies.
- Consumer packaged goods unless you can demonstrate the efficacy of the social impact. For example, can you provide evidence that the CPG has demonstrably improved healthcare outcomes or reduced income inequality, and how broad-based is that impact in terms of the number of people benefiting?
- Foods or nutritional supplements. A food or supplement might be highly nutritious but we would need to understand its measurable impact on health outcomes in the general public, especially if that item is just one of many healthy food choices that are available to consumers. Said another way, must this food or supplement compete for shelf space with other healthy foods at a Whole Foods store? The product may be interesting to our network if you can provide evidence that the product’s introduction demonstrably reduces the amount of less-healthy food consumed by a significant number of people. Agritech companies that produce food with demonstrably lower impact on the environment can be interesting.
- Services-based companies, as opposed to product-based companies. Services companies face challenges in scaling significant revenue since revenue typically scales with employee headcount.
- Consumer-focused companies serving a local market AND where many competitive alternatives are readily available to the consumers. A new fitness club or a food-delivery service might be examples.
- Brick-and-mortar or venue-based businesses. These businesses typically require significant capital in order to scale to a level that would enable an acquisition.
- Companies whose basic mission is to solve a problem experienced by most businesses, and where the solution can incidentally also be used for social-impact purposes. We would like impact to be the primary business mission of the company.
- Socially-responsible companies who are not addressing a significant societal challenge as a primary company mission. We love social-responsibility but that alone is not sufficient for getting funding.
- Companies whose sole social-impact is limited to sharing a portion of their profits with charities
- Companies outside of Texas (unless you have a signed term sheet from a sophisticated lead investor in your home region who will have a board seat)
- Companies with an ICO (Initial Coin Offering) even if the company has an impact story overlay. We believe that such companies are not truly motivated by social impact.
- Companies whose primary mission is to build an online community where the online experience is intended to improve the social-emotional well being of the community members. It is difficult to build a critical mass of users, and it is difficult to provide evidence of the efficiacy of the platform in terms of increasing the social-emotional well-being of the members.
Additionally, if a key part of your company’s story is blockchain, please quantify how that technology choice increases the efficacy of your company’s social impact compared to use, for example, of an SQL or relational database. Our network’s focus is more on social-impact and less on technology.