What kind of investment help can Austin and other Texas startups get in the future after the stock market collapse. With the Central Texas Funding Forum coming next week (use discount code bd400 when registering), we asked Hall Martin, the director of the Austin Entrepreneur Network, about the changes in the local investment community.
Q: What kinds of changes has the economy brought to the investment community in Austin?
With the stock market down anywhere from 25-percent to 50-percent depending on the asset class, angel investing is seeking a similar drop. A recent poll by the Angel Capital Association shows that angel groups across the country are continuing to invest in the same number of deals this year as last year, but the dollars invested are down by 25-percent. We’re seeing the same thing in Central Texas. Deal flow continues but dollars invested are lower.
Q: How has these developments changed the scope of technology development within Austin?
Segments that don’t need as much capital such as software and social media continue see a great deal of innovation. Other segments that require higher capital investments such as alternatve energy and medical devices are seeing a more challenging environment. Also, many are turning to granting institutions such as the Emerging Technology Fund and SBIR grants to gain funding for their technology-based companies.
Q: This conference is attracting outside investors from New York and other parts of Texas. Will this help budding entrepreneurs with finding the better investment team?
I think these challenging times are driving people to more creative solutions. We have a number of alternative financing options that didn’t exist a few years ago and we’ll see that in the funding forum on May 7. There’s one in which investors invest in real estate and the proceeds go to funding a startup. The real estate provides collateral to the investor but instead of taking payments they invest the proceeds into the startup.
Q: What should novice entrepreneurs do to prepare for this summit?
They should make an evaluation of their current business and decide on the type of funding you need and the type of help you need. They should look for people who can provide not only the funding but also the help they need. People who are engaged in helping a novice entrepreneur with the business are much better than those who only write a check.