Fort Worth gets its first group offering start-up capital for entrepreneurs

FORT WORTH — A group of investors has formed the city’s first organized
angel-investment group to invest seed money in start-up companies.

Kerry Curry Staff Writer Dallas Business Journal

About 30 potential
members attended the
inaugural event for the
group, called Fort Worth
Angels Inc., on March 6,
said Glenn Cato, a founding
board member.

"The purpose is to provide
opportunities for angel
investors or individuals
interested in private-equity
investments to see good
sound companies on a
regular basis," Cato said.
"Our goal over the next 12
to 18 months is to grow to
100 to 120 members."

The group, which is forming as a nonprofit corporation, plans to hold monthly or
bimonthly events where entrepreneurs make presentations seeking venture
capital. It plans to hear its first presentations May 1.

The angel network was the brainchild of MedTech, a medical technology
incubator in Fort Worth, said Warren Webb, MedTech’s president.

"We at MedTech see this as a benefit to the
community," he said.

MedTech will contract with the angel network
to provide administrative services such as
receiving, screening and preparing
applications.

Cato said that while the angel network
intends to target the technology and medical
industries, it likely will look at other sectors
as well.

"The intent will be to find companies that are
of interest to the angel network," Cato said. "We think there is a higher
probability of finding money for entrepreneurs if we are presenting companies that
the angel network is interested in seeing."

The group is looking for accredited investors to become members of the network.

An accredited investor, a Securities and Exchange term, is any person who has
an individual or joint net worth in excess of $1 million, individual income in excess
of $200,000 or joint income exceeding $300,000 per year for the last two years
and a reasonable expectation of reaching that level in the current year.

Members will pay a $1,000 per year membership fee to join, a fee that will allow
them to hear presentations from an estimated 30 to 40 companies annually.

Entrepreneurs or companies seeking to present before the network will pay a
$250 application fee, and those chosen to present will pay an additional $500.

"We want to be sure we are seeing entrepreneurs who are very serious about
launching companies," Cato said. The fees "may screen some entrepreneurs who
haven’t spent a lot of time in developing their business idea," he said.

The group has not yet created a budget, but plans to use membership and
application fees to offset its operating costs. Board members will serve voluntarily
without pay.

Besides Cato, the founding board consists of Bob Bintiff, managing director of
Briggs Capital; and Bill Lang, president of TechnoBridge Inc., both Fort Worth
companies. Cato works for CFO Advisory Services, which has offices in
Richardson and Fort Worth.

Alliance with Houston

Angel investors will decide individually whether to invest in a company that
presents before the group, Cato said. Once a presentation is made, it will be up
to individual angel members to make contact with the entrepreneur, he said.

Typically, individual angels invest between $10,000 and $250,000 in a project.
Companies that get angel funding can typically expect to receive as much as $2
million in seed funds from an angel network, Cato said.

The new network doesn’t see itself competing with similar groups in Dallas, where
at least three angel networks are operating.

"We will complement the overall angel networks by providing access to additional
capital where there has been a drought of capital for seed-stage companies,"
Cato said.

While efforts will be focused primarily on North Texas companies, the group is
working to establish affiliate relationships with other angel networks.

Michelle Weisblatt with the Houston Angel Network said the Houston group has
had initial conversations with the organizers of the Fort Worth group about
forming an alliance.

Weisblatt said Houston has talked about having one meeting per quarter in which
it looks at deals from outside the Houston area. It and other angel networks also
have talked about forming collaborations, she said.

"We really want to make this state have a stronger angel environment," she said.
"I think it makes sense to work together."

Those who work with entrepreneurs already are salivating about the possibility of
additional capital for Fort Worth entrepreneurs.

"This is a really big deal," said Catherine Simpson, executive director of the Fort
Worth Women’s Business Center, who said access to capital remains the
entrepreneur’s No. 1 problem.

"I can’t tell you how many women have brilliant ideas, have the management
skills and have everything they need except the seed money," she said. "The
most discouraging thing I have to say is that I don’t have any angel investors in
my pocket."

Contact DBJ writer Kerry Curry at [email protected] or (817) 837-1082 ext.
13.

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