Garaizar Aims to Elevate Houston Angels’ Profile and Outreach
Juliana Garaizar joined the Houston Angel Network as managing director just as the group was seeking to revamp its operations and take a more prominent role in the state’s entrepreneurial ecosystem.
The first challenge Garaizar confronted was the fact that the angel network, founded in 2001, had historically been a bit insular, even demure about its accomplishments. “We should have been on the investment map of the U.S. but we were not because we were not reporting,” she says. “I made sure I got all the statistics for the investments that had happened in 2012, and it was a big surprise: we had invested $6.7 million.”
In the six months since she came aboard, Garaizar has sought to elevate the network’s profile through partnerships with accelerators and consortia in life sciences, energy, and technology. “We want to try to be a catalyst,” she says. “There is a lot of energy, a lot of new initiatives. We want to make sure we put them all together and that they work together.”
Garaizar started out as a project manager for Citigroup’s Asia technology office and for Spain’s trade commission. But Big Finance was getting too technical, she says, so she decided to get an MBA from the London Business School. It was during a study abroad quarter at the University of California at Berkeley that Garaizar got the startup bug. “I was in Silicon Valley and I really loved it,” she says.
Back in Europe, Garaizar was able to delve more deeply into the startup world during stints as the manager of the Sophia Business Angels network and the Antipolis Innovation Campus, a business incubator, which are both based in France.
The experience and rolodex that Spanish-born Garaizar built up in her globe-trotting past make her a good fit for a city like Houston, whose economy, thanks to the energy and life sciences industries, has numerous international influences. And if the Houston Angel Network had tended toward insularity in the past, Garaizar is quickly putting an end to that.
Xconomy: What drew you to the Houston Angel Network and what are your goals?
Juliana Garaizar: My husband got offered a position at Shell Oil, so we decided to move here. I got [to Houston] 7 ½ months pregnant. I helped with one of the companies that we invested in back in France to set up an office here. They did very well here, and decided they needed more funding to expand to Canada and Latin America, and they contacted [the Houston Angel Network] to fundraise. I then realized they (HAN) were recruiting and so I decided to apply. Last year, they went through a very big strategy session, and they made a lot of changes at HAN, creating a strategic framework.
There are three main strategic lines, the first of which is getting more awareness about HAN. We’ve been around for a while but I think we’ve been a very quiet group. Some people said they were even a little elite. You had to be a very specific type of company to be able to get to them; you had to be basically investment ready. Also, we were charging our entrepreneurs fees, fees to apply, to present, and also when they were successful—we would charge a success fee. We decided to get rid of those fees.
The second strategic line is education. We have a lot of members who come from the energy sector, doctors, even real estate people, who don’t know about angel investing. We need to be making sure to provide an educational framework, and have specific mentors every time they come in. They will be assigned to another investor who will be mentoring them, to make sure they participate in every part of our investment process: screening, selection, due diligence and the deal-making part. I put them in touch with mentorship opportunities, then formal training. Last March, we did the first Texas Angel Education day at the University of Houston. We are also doing a lot of webinars, and we do that in collaboration with other networks. With [The Indus Entrepreneurs], we have the Texas Funding Forum. Also we do a training session for entrepreneurs to see what they need to know about what angels want when they invest in them.
The third strategic line is creating the verticals. Some members are solely interested in one kind of investment. They won’t even come to a meeting that has pitches that are not in their field of interest. We created the energy, life sciences, and tech and mobile sub-interest groups. For the tech/mobile group, we decided we wanted to create a seed fund. We don’t have that many members who invest in tech and mobile, and we believe it’s because they don’t know about this space. So we thought, let’s create a seed fund. It will be accelerated by [startup incubator Start Houston]. So when [companies] actually apply to HAN, our members will be comfortable because there is a track record. Before I was telling these startups to go to Austin because the city had a lot of knowledge there, and then maybe we would follow up. But now we want to own the process and make sure these kinds of companies know they can rely on us and they don’t have to go anywhere else.
For the energy subgroup, we already have [Houston's Surge Accelerator, launched in 2011 with funding from HAN], but we believe there are also other angel sweet spots for investing. The startups have to be capital efficient. We don’t have the money for very big energy deals. We have talked to [the Houston Technology Center’s] energy screening committee to vet the deals and come together to do co-investments.
We are open to non-HAN members. We need external knowledge, especially in life sciences. We need investors. We’re trying to partner with the Houston Area Translational Research Consortium. We’re helping to put the ecosystem together. We have the money but not the expertise to vet those deals. Maybe package it and have a fund, like in tech and mobile?
X: What are your main challenges? Are there institutional or cultural obstacles you’ve had to deal with?
JG: My biggest challenge is sustainability. We’ve been overambitious, too many initiatives in place. And then we cut our budget by cutting the fees to entrepreneurs. One of the ways we [have offset this] is by increasing the fees to members. Some of our less-active members took that as an excuse to leave. The fact is that we have less money and we are doing much more. That’s kind of a concern. Of course, we are trying to counteract that by doing much more awareness to attract much more people. We are getting traction there. Our members are happy that they see a lot of new faces. We are getting new sponsors. We are putting a lot more into the ecosystem and fortunately big companies are seeing that and they are willing to partner with us.
The second challenge is to collaborate. There are good initiatives out there and they are not connected to the ecosystem. We can see that there’s a lot of energy but still not a lot of coordination between all the action. I believe we can piggy-back a lot more between initiatives and make them bigger.
In the case of both life sciences and energy, one of the things I want to do next is create an investment map of the ecosystem. Who’s really there? There are plenty of energy investors doing their own thing but we don’t really know of them. I met a Chinese fund manager and he’s telling me he has $400 million to invest in Houston, and every time he comes he doesn’t know who to go to. There’s plenty of opportunity there so we need to make sure we know what the map looks like.
X: What do startups need to know as far as what you are looking for when you invest?
JG: The most important part is the team. We need to make sure that there’s a good team or a good potential for a good team, that they have either the expertise and they’ve done it before. There has to be some chemistry, too. On paper and at the pitch we thought they were a great business idea [say], but there was not any chemistry between our investors and the entrepreneurs. The next thing is the opportunity, the idea. Is it really innovative? And, of course, the market, have you thought of how you are going to get the money back? The exit strategy.
X: How much interaction are you seeing from international investors or startups coming to Houston?
JG: I had a lot of interaction in my background. It’s one of the reasons I’m here. With [Surge Accelerator's first class], we had only one international company from the 12. This year, four of them are international; one of them is from my hometown in Spain. They recruited the company but the company didn’t want to come. I called them and convinced them. They were amazingly successful.
Right after Surge, they got 1.5 million euros from a European fund and $1.6 million from Houston. We should try to partner with other groups used to international investing. One of the things we decided to do was with Gavea Angels in Rio de Janeiro. They are interested in investing in Houston. With Surge we are doing remote pitching. We recorded the pitches at Surge’s demo day and are now editing them and we’ll put them together so that [Gavea] can see what we saw at Surge and we can start doing some collaborations.