News Article

In San Antonio, an NBA Star Helps Launch City's First Angel Network
Date: Dec 13, 2016
Author: David Holley
Source: xConomy ( click here to go to the source)

Featured firm in this article: WiseWear Corporation of San Antonio, TX

San Antonio--In a crowd of sport coats, collared shirts, and Oxford shoes, it was easy to spot Brent Barry, and not only because the former NBA player towers above almost everyone. He was also dressed more casually, trading in business attire for a warm jacket, beanie, jeans, and a pair of New Balances.

Barry's outfit made sense: He invited the crowd to gather at his home north of downtown San Antonio on Dec. 7 to celebrate the launch of the San Antonio Angel Network, a group he helped create earlier this year. The group was no doubt happy to have Barry dress however he pleased.

It was a uniquely chilly night for South Central Texas. Mark Novotny was in town for the launch party from Boulder, CO, and wearing a jacket thick enough for work on a snowy ranch. Novotny runs Spinal Stabilization Technologies, which has offices in Boulder, San Antonio, and Dublin, and he was considering becoming a member of the angel investor network.

That was the purpose of the event: to draw in new members of the San Antonio community who have the wealth, knowledge, and interest for investing in startup companies. In September, the San Antonio Angel Network publicly announced itself and said it had hired former Rackspace employee Chris Burney as the executive director.

The group is the brainchild of other former Rackspace employees, including Lorenzo Gomez, Lew Moorman, and Pat Matthews, as well as others in the San Antonio startup scene, such as Michael Girdley, Amit Mehta, Cole Wollak, and Barry, the basketball star. Since retiring from the league in 2009 (after winning two championships with the Spurs), Barry, now an NBA analyst, says he has made select investments in real estate and small businesses--one being in Alamo Beer Co.

But Barry says he was surprised to learn that San Antonio, the seventh largest city in the U.S., lacked a network for angel investors, which might help individuals find and invest in local startups. Even much smaller cities in Texas, from Austin to Lubbock, have such networks.

Barry became involved after meeting Mehta at the school both their children attend. Mehta is a radiologist who is also the founder and chief medical officer of Intrinsic Imaging, a startup that offers image management and radiological review services to life sciences companies. Mehta knew Girdley through State Rep. Diego Bernal, and they brought together a core of six angels by June. Barry, whose prominent name gives the organization an obvious boost, joined in September. (Besides winning two championships, Barry's other NBA claim to fame is that of 1996 Slam Dunk champion.)

"It's been bandied about for a while but no one had done anything about it," Girdley, who founded a coding school and venture fund in town, wrote in an e-mail about starting the network. "The city needed a place where early stage ventures can go and investors can find them."

For Pat Matthews, who runs a startup called Filestack, the network represents the possibility that San Antonio could attract more startups and business to town.

"If we can create more funding sources that make it easier for the best entrepreneurs to raise money, more of the best will come to San Antonio or at least be connected to us," Matthews wrote in an e-mail. "Both situations are powerful for the city."

For Barry's part, the angel network is an opportunity to invest in the technology and science he's found interesting since he was a kid, while also providing funding to early stage startups, which might keep those companies in San Antonio. It's common for former athletes to get into investing after or during their sports careers. In the NBA, LeBron James is known for making loads of cash on Beats, the headphone equipment company. Kobe Bryant and Carmelo Anthony are both involved in their own venture capital firms.

"Keeping it here and promoting what's here--with this, we're not letting these people escape us," Barry says of San Antonio and its entrepreneurs. "We want to be as diverse as possible. We want to make sure all of those avenues are available."

With a two-piece band playing rock in the background, about 80 potential investors attended the launch party, be it to see how a former NBA player lives, to get free barbecue, or to consider joining the network, which charges $1,800 annually for its membership. About 30 angel investors have joined so far, according to Burney, the executive director.

To be a member requires that you're an accredited investor, meaning that you either have a net worth of more than $1 million, an annual income of $200,000 (or $300,000 with a spouse), or run a business in which all the owners are accredited investors. New members can sign up online, and the group has quarterly or monthly meetings to examine new potential investments. (Its first meeting is this week to consider HelpSocial, a startup that helps businesses provide customer service through social media.)

Many in the crowd were already involved in the startup world. One angel investor considering joining the network was Robert Miggins, who runs a business called Go Smart Solar, which lets potential customers see whether their rooftops might be compatible with installing solar panels.

Jason Wilson, another potential member, is the chief operations officer of WiseWear, a smart jewelry maker that can connect to smartphones via Bluetooth and can send messages to a wearer's emergency contacts. He has a second business designing vibrant sport coats, like the one with a paisley-like design he was wearing at the party.

Others present that evening included David Doggett, an investment banker at Ehrenberg Chesler, and Pratap Khanwilkar, the vice president of product development at InCube Labs. There was even an appearance by Graham Weston, the co-founder, chairman, and former CEO of Rackspace and a driver behind much of the revitalization behind San Antonio's downtown tech district, which includes operations like the Geekdom co-working space.

There was only one touchy moment during the evening. It came during a presentation by Jamie Rhodes, a founder of the Central Texas Angel Network in Austin. Rhodes showed a slide indicating that the average size of an angel round nationally increased to about $850,000 in 2015, up by more than $300,000 from the years before. Responding to a question about the disparity, Rhodes noted that a reporter had recently asked him whether he thought there was a bubble in the angel market--words that might make prospective angel investors feel uneasy.

His answer? Maybe on the East or West Coast, but not in "flyover country" like Texas, Rhodes said. While the region may have once been ignored, the rising tide of deal size is an indicator that there's more activity and better deals in Texas, Rhodes contended.

Rhodes swiftly moved on from the subject, lightening the mood by noting that the reporter must not have liked what he said--she didn't end up quoting him.

Bubble or not, there is clearly interest from investors in the Alamo City.

"The way to grow that activity level is by connecting people internally inside of SA and externally across the state," Girdley wrote via e-mail. "Those links are how the next Rackspace or KCI (Acelity) can be backed by local people."

As the evening was winding down, Barry joined the two-piece band with his own guitar, and quietly sang back-up in a Pearl Jam song as the chatter of the remaining guests dwindled. The famously gregarious Barry was an active host--tending the fire pit to make sure it was stoked, fixing a problem with the loudspeaker, and waiting until his guests started eating before piling up a plate of barbecue--and greeted almost every person as they entered the courtyard of his home. It's easy to see how those traits might extend to his emerging interests in investing and entrepreneurship.

Meanwhile, a heavily used basketball hoop hung in the background, inviting every guest to imagine what it might be like to challenge the two-time champion to a game of one-on-one. No one spoke up.