In 2012, InventureWorks hosted The Vault — the first Shark Tank-style pitch event in Acadiana during the inaugural INNOV8 Lafayette week — with 17 innovators and a dozen investors. It was the start of bringing together innovators and investors around ideas that had commercialization potential.
InventureWorks’ Pete Prados realized the community needed a formal vehicle to share equity with accredited investors, so Acadiana Angels, an initiative of INNOV8 Acadiana, was formed in April 2016 with financial stewardship from the Community Foundation of Acadiana.
The group currently has 14 accredited local investors, with membership growing monthly. Each Acadiana Angel also becomes a member of the larger NO/LA Angel Network, which has more than 120 members from around the state. I recently spoke with Pete to learn more about Acadiana Angels.
What advice do you have for start-ups seeking investment?
Know your market intimately and have accurate numbers. The vetting teams will do their homework, and many are already subject experts in the field being presented. If the group discovers that an innovator cannot validate his claims or does not have a grasp of the competition or barriers to entry, the chances of getting a successful round of investment is greatly diminished.
What are the key elements that an Angel investment group is looking for in an investment?
Here are a few: Founders who are knowledgeable, coachable, passionate, even-tempered and mature; a market or market segment that has great growth potential and low barriers to entry; a company or innovation that is a good product or market fit in a growing industry and one that can be protected or not easily replicated; market validation including customers and revenue (preferred but not required); reasonably quick growth and easy acquisition of customers; a clear path to break-even with realistic, validated sales projections; and an exit strategy with target acquisition companies.
Why is having a “team” a critical aspect to getting funded?
No one can launch and build the next big company alone. We love to see innovators complement their skill set with others to round out a solid business plan. Sometimes the innovator is a better product line developer than sales person, or vice versa. Sometimes team members are vital to providing key service elements to the business, but are not equity partners. Having roles and skills clearly defined in the business execution plan is critical, since the investment team will not be running the business.
How does the process for getting investment work?
The first step is to contact me ([email protected] org) to set up an initial consultation. The next step is to provide critical documents like an executive summary, pitch deck and financial plan. From there, a screening team may request a short meeting to ask questions and review the documents. Those with ideas that seem viable will be asked to present at our monthly meeting where members will vote whether to formally proceed with due diligence, which can take three to five weeks. Following the due diligence period, our investors decide if they want to provide funding for the project.
How does a company determine how much money they should ask for?
That is often the hardest thing to determine. We suggest getting formal quotes from professional organizations that could eventually be utilized to launch a company, such as Realtors, manufacturers, software engineers, attorneys, CPAs, marketing and insurance agencies, etc. Adding up those quotes can help an entrepreneur get a figure, which can then turn into the initial request.
How is mentoring provided from an Angel investment group?
Each investment is an opportunity for Angels to help entrepreneurs achieve their goals. The mentorship can open doors to colleagues in the investor’s circles, which is often more valuable than the monetary investment. Having experienced mentors who are willing to meet with entrepreneurs regularly is the ultimate partnership. The vast majority of Angels want to help beyond just writing a check.
Where can we go to learn more about funding?
Visit www.innov8acadiana.org/angels to learn more about our process. Those with energy-related innovations should immediately apply for the LAGCOE Pitch Challenge via the INNOV8 website. Many books, videos and web sites on the subject are also available. As members of the national Angel Capital Association, I suggest reviewing its web site at www.angelcapitalassociation.org.
Zachary Barker is executive director of the Opportunity Machine, a LEDA-backed initiative that focuses on cultivating Lafayette’s entrepreneurial and technology based industries.