Investment Criteria Information

The Criteria You Need to Know

If your company meets all the criteria below, we encourage you to apply for funding from Central Texas Angel Network. We welcome the opportunity to review your application. If your company does not meet these criteria yet, please keep working on it and apply when your company is ready.

US Based companies strongly preferred. Note: you do not have to be located in Texas to be considered for investment.

Investment Vehicle — You are raising your round via Preferred Equity or capped Convertible Note. CTAN does not invest in uncapped Convertible Notes or alternative investment vehicles, known as SAFE (Simple Agreement for Future Equity) or KISS (Keep It Simple Securities).

Company Maturity — CTAN members typically invest in Pre-Seed, Seed and Series A deals. Past Pre-Seed / Seed deals have had an average pre-money valuation of $4.72M, with Pre-Seed typically at a lower valuation than that average. Series A deals have had an average pre-money valuation of $11.01M. Our members have an expectation that your product has already surpassed a proof-of-concept maturity level. For non-life science companies (SaaS, CPG, Industrial, etc.), we expect demonstrated customer engagement. For life science companies, we expect IND, 510K or PMA to have been filed or planned to be filed within 6 months of the start of the funding round. We are interested in companies with at least one founder working full-time on the company, with the founders ideally having either sector experience, previous exits, or both. We rarely invest in companies that have only one person. This does not mean you have to have a co-founder, but it does mean that you should have at least one more person if not more working with you on building the business.

Differentiation and Defensibility — Your company should be able to communicate how it is differentiated from direct and indirect competitors, and how it will maintain that differentiation going forward. Examples would be patents (ideally granted but submitted patents with office actions are still a plus.)

Rapid Growth Potential — Your company should have a scalable business design with solid prospects for rapid growth. In particular, your company should have a clear strategy for generating profits and managing revenue sources effectively.

Realistic Financials — Your financials should be based on sourced data. For example, user seat costs for a SaaS product should have evidence people will actually pay the cost referenced, either through your own sales or competitors. Companies with less than three months of runway (i.e., cash on hand = 3X or more the burn rate) are very unlikely to get investment.

Financials should be well thought out and modelled, i.e. Your sales ramp should be supported by reasonable expenditures needed to support such a ramp such as training costs/time for sales staff.

We suggest enlisting the support of a consultant to help you build your model if this is not a team strong point. Financials should be modelled out at minimum 2 years.

Exit Strategy — As early-stage investments have a significant amount of risk, your company should have a clear exit strategy that would support a 10x return of investment capital at time of exit. Evidence of similar exits in the same space as your company is ideal.

Companies We Do Not Consider — Real Estate Development deals, consulting companies, franchises, and lifestyle businesses. If you have any questions regarding eligibility, please contact our team at Director@ctan.com.