Our Investment Focus
CVAN prefers to focus on Texas-based deals in the early-stage of development. Early stage companies are those where initial capital has been exhausted, and now they are in need of capital for full-scale manufacturing and sales or initial phase and expansion.
Expected capital requests of no more than $2M are considered, with deals above $1M requiring a lead investor and terms sheet.
While the merits of each investment will vary, we will evaluate your venture according to the following criteria.
Management team. We look for teams of high-quality entrepreneurs with a track record of leadership and performance - either in the company’s specific industry or in prior entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors.
Market opportunity. We invest in solutions that address major problems for significantly large target markets (i.e., a $100+ million market). Your company must demonstrate a strategy to claim a significant share of this market (i.e., 20%+). There are plenty of great business ideas - but not all businesses will generate returns that justify angel investor and venture capital financing. Therefore, providing a solution to a problem with a large potential market is essential.
Use of proceeds. Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We often fund activities that include research and product development, building a sales and marketing infrastructure, and hiring key executives.
Growth potential. We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. You should have a strategy to achieve multiple sources of revenue. We also require well-conceived financial projections, based on sound assumptions, demonstrating consistent profits and cash flow growth.
Competitive advantage. Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, exclusive licenses, exclusive marketing and distribution relationships, strong brands, scarce human resources (i.e., knowledge and skills), and access to scarce raw materials.
Fit. Our group members - all accredited individual investors - have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that these investors can provide. As such, there must be a fit between members of our group and your idea.
Technology. We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to common products and services. (Is this a nice-to-have, or a need-to-have product or service?) However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialization. Any breakthrough innovation must be accompanied by a strong business plan.
Exit strategy. Our members typically seek returns of at least ten times their initial investment within seven years. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy - how angel investors will extract such returns - is essential. For example, do you plan to sell the company to an established corporation in your industry? Or, will your exit be through subsequent rounds of financing - venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the how - the operational strategy that shows specific steps you will take to achieve the exit.
- Business Products
- Clean Technology
- Computers and Peripherals
- Consumer Products
- Electronics / Instrumentation
- Financial Services
- Food and Beverage
- Healthcare Services
- Internet / Web Services
- IT Services
- Marketing / Advertising
- Media and Entertainment
- Medical Devices and Equipment
- Networking and Equipment
- Retailing / Distribution