PS. Let’s leave discussions of assumed discrimination or otherwise out of this (and other) conversations on this blog, or I will close comments on this post (and delete the offending ones).

you seem to assume that many, or most, or perhaps all, angel investors are scions of wealth. you are very misinformed, if that’s your view. in the country as a whole, 80% of millionaires are first generation rich. I can tell you for sure that HAN is a valid sample of American millionaires.

i find your abrupt swerve to some kind of racist element particularly puzzling and bizarre. you feel you were discriminated against on the basis of being Irish? did you perhaps apply to HAN during the late 1800s

When you listen to the comments of the entrepreneurs who approached HAN and did not get selected to present, do you hear an undertone of bitterness at the rejection?

Anyone can understand that sentiment. It does not feel good to put yourself, of your business, out there, and have someone say “no thank you.” But the misunderstanding seems to be that HAN is some arbiter of excellence–that if they invite you to present and choose to invest in your company, that is a signal it’s going to be a “success,” or the converse, that if they’re not interested then your company WON’T be successful.

HAN–or any Angel Network, or any individual Angel for that matter–does not exist to give out gold stars. When Mr. Deaver says he was able to self-fund and get funding from friends and family for multiple years in a down economy, my question is why in the world would he WANT HAN? When you make a deal with an angel, you give up some percentage of ownership in your company. If you have the money yourself to keep yourself going, why would you want to be in the position to have to share your future earnings with some angel bloke (or woman)? And it’s almost guaranteed that “Friendly” (i.e., family, colleagues, your dentist) investors are not going to be as savvy and as hardlined about how many shares they ask for in exchange for their money. Or, as Mr. Steakley suggests, open a line of credit at a bank.

I used to work with an organization like HAN, and it always seemed so unfortunate that entrepreneurs viewed an angel investment as a gold star. You have to understand that the individuals involved in that network all have their own priorities. Angel investing is risky; many companies don’t make it for one reason or another and their money is lost. Or even if the company does succeed, the early investors are often greatly diluted in later rounds of funding. So, naturally, when they evaluate an investment opportunity, they are looking for certain kinds of companies that can really be a “home run”…and compensate for all those times they’re going to strike out.

But, if you don’t really need the capital to succeed in your business, why would you bother with them? It’s not some gold star, and it’s not free…you’re giving ownership in your company.

Oh, and Mr. Steakley, investment from my family and friends were good enough to carry me through three years of state-of-the-art research and development – without doubt more depth in my friends, and more of them, than you could show.

But, i do agree with Joe Blow, that if you’ve got revenue, and you’ve got orders, you probably don’t need angels, in a normal situation. normally, banks would lend you money.

If Deaver’s heated comments in this very public forum are a valid sample of his interpersonal skills, I guess we can all detect the reason friends and family funding was not an option for him.

Silver spoons must contain mercury, because the brain damage is undeniable. So I suppose I shouldn’t have been surprised when Kala Marathi, managing director of the Houston Angels Network and a Rice University graduate (can you be a graduate yet still need your diapers changed regularly?) said to me, “Oh, we’re well beyond that level, we leave that kind of funding to individuals, we see ourselves as more like venture capitalists for the higher-end technologies”. That’s an exact quote. In other words, Houston Angels Network won’t lower themselves to provide angel funding – it’s beneath them.

When I got frustrated with her, she actually had the nerve to say to me that if I needed money for the project, I should have gotten that first before starting any work!!! She treated me like I was defective for not having money, and stupid for thinking I could do anything without it. Incidentally, the same mental midget sits on the Rice University technology startup board – when about good-ole-boy network did you not understand?

Bottom line? If you’ve got anything truly innovative and it doesn’t involve oilfield and your daddy isn’t a Bushie Republican with money to burn, don’t waste your time with HAN. In nature owls are actually predators of low intellect, and will feed on carrion if live game isn’t readily available.

As many of you entrepreneurs know, there is a crucial stage in the development of a business where it goes from a great idea on paper and in PowerPoint to something tangible that can be demonstrated and capable of attracting some marketshare. To go from “great idea on paper” phase to “tangible market ready product” obviously requires some funding and that is a significant reason why so many ideas just forever remain on paper because of lack of funding the get the idea off the ground.

Organizations such as the Houston Angel Network won’t even deal with you unless you have a tangible product to show. With insufficient funding to build that tangible product, a potentially great idea remains forever on paper.

I am glad that the Houston Angel Network exists but I believe that that it would be worth their while to set aside a subset of their funds to address the needs of the hundreds of companies that need just a small amount of funding to get off the ground. Presently, there seems to be a gap in the process that requires companies to have gained some market penetration with their product before qualifying for funding but in order to get to that stage, these companies require startup funding. Hopefully this gap will be closed at some point in the near future.