23 Mar Catching Up With Dallas Angel Network
The Dallas Angel Network is a non profit organization that connects entrepreneurs with angel investors. The DAN is run by volunteers and financial professionals interested in investing their own capital and meeting like-minded individuals within the Startup Community. The DAN does not charge entrepreneurs for its services which allows maximum participation by entrepreneurs and increases the stream of opportunities for both startups and angels.
Launch DFW was able to catch up with The Dallas Angel Network’s CFA, Sammy Abdullah, to get quick profile of the organization, and found a great story of how The DAN was formed.
So the idea to start The DAN was really inspired by an angel deal that Kevin, James, and I were involved in. James and I have been close friends for years and we invested in a bar/restaurant concept opening in Houston with a group of friends and other angels. We structured the deal, did the due diligence, closed the transaction, and at the end of it all, I thought to myself that I couldn’t be happier with the deal. I mean, here we are making a good investment in a well structured transaction with a management team we love; not to mention, management was also happy with the deal. Overall, it was a win-win-win for everyone and if you said to me Sammy, what are you most comfortable with: your investment in Houston or any stock you own? The answer by far is the investment in Houston. I knew right then I had to figure out a way to see more deals like this. The first thing that came to mind was to look for an angel group in Dallas I could join. I did a lot of research on local groups and talked to a number of entrepreneurs about the angel community here in Dallas. I came to the conclusion that it would be best to start a group from scratch that would incorporate the best practices of angel groups all over the nation.
At this point, it was time to sign the documents for the deal in Houston, and sure enough, the attorney representing the management team was Kevin Vela over at Vela Keller PC. I talked with James and said “James, instead of faxing in our paperwork, let’s go meet Kevin” because after all, this lawyer was our adversary and after some strong negotiations that all ended well and amicably, I wanted to meet our nemesis. James and I walked into Kevin’s office, we sat down for some small talk, and Kevin asks us what our professions are. My answer was something along the lines of “I work for a big institution and my job is to invest their money in safe debt securities, but really, what I want to do is get an angel network going.”
Right then The DAN was born. What should have been a 5 minute visit with Kevin to sign some documents turned into an hour long conversation about how Kevin, James, and I could work together to make The DAN the strongest angel group we could make it. As we did our research, talked to other angel groups, talked to VC, and talked to entrepreneurs about how best to structure The DAN, the time finally came to get a website going. James and I have a good friend, Chris Koller, who builds beautiful sites. I went to Chris asking his company, Ideal Growth, to build us a website at the friends and family price. Being a dear friend, he of course agreed. I began to tell him what it was for and began talking about The DAN with him, and he came to me and basically said “Sammy, I love the idea of The DAN, and I will build the site for free as long as I can be involved.”
Even if he wasn’t building the site for free, Chris is an incredibly smart guy and would be a great addition to the team, so I agreed right there on the spot. That is the story of how Kevin, James, Chris, and I formed The DAN.
The DAN’s founders are investors themselves and Sammy offers a couple of examples of investments made and some background on the co-founders.
James Austin and I invested in the bar/restaurant concept in Houston and represented a substantial level of the overall $405,000 investment. Chris Koller bootstrapped his own company, Ideal Growth, and Kevin Vela graduated law school and immediately opened Vela Keller PC. I have also been a part of four start-ups and loved working in high risk, small companies. We created The DAN to do deals, so there will be plenty more to come, hopefully.
The DAN recently had its first pitch night in January, Sammy tells us the feedback was excellent and offers an update on one of start-ups that presented.
The feedback we got was excellent and we actually have assembled an investor group to pursue one of the transactions (Digital Proctor). The presenters really stole the show as both Digital Proctor and SMART OES killed it, and everyone was very impressed with the caliber of entrepreneur we had. We got lucky finding them, and just hope the next meeting can have entrepreneurs who are as well polished and astute as those two are. Overall, everyone appreciated the meeting, liked the format, loved the presenters, and liked the fact that The DAN isn’t trying to collect money from either entrepreneurs or angels; we have strictly assembled the group to do deals, and I think people really appreciate that.
We are pursuing a transaction with Digital Proctor, although the discussions are still preliminary. We are spearheading the transaction, the investor group has met, and we are currently finalizing a term sheet to submit to DP (Digital Proctor).
As for future pitch nights, He tells us.
We want to have pitch nights as often as possible, but we will only do so when we have two presenters that we have diligenced on the front end and that are well polished and “presentation-ready”. The worst thing we could ever do is waste angels time with entrepreneurs who aren’t financeable, so while I would love to have meetings all the time, we will only do so when we have great presenters that are ready.
Organizations similar to The Dallas Angels Network charge companies for access to their investor network and to make presentations, Sammy explains how it is able to offer the same services without charging startups for its services.
The DAN is bootstrapped. We set it up as a 501(c)3 intentionally so that people see we are technically a charity and therefore the DAN can’t distribute any proceeds to anyone. While we’re always happy to have sponsors for our events to pick up the bar tab, we really don’t see any reason why we can’t operate The DAN on time alone. Kevin, James, Chris, and I have each put in $200 to pay for expenses along the way and so far we’ve been able to get to this point and still have money in the bank. Don’t get me wrong though, we’ve had help in the form of donations of services. For instance, we couldn’t have set up The DAN without Vela Keller donating their legal assistance, Idealgrowth donating the website, and numerous individuals in Dallas and at other angel groups outside Dallas taking the time to discuss how best to structure The DAN. In addition, Hully & Mo’s gave us a room to present in at no charge and we hope they continue to do so. The support we’ve received to date has been great, and in an ideal world, The DAN will never have to ask angels for any money to cover operating expenses. And never, will we ever, ask entrepreneurs for a penny at point.
Follow The DAN on Twitter.