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Ventures That We Seek

Applicants that are successful in obtaining funding from TCA usually demonstrate certian key traits. These include:

1. A strong management team with relevant experience

We expect you to explain the relevant experience and domain expertise of your team. If the team is incomplete, we expect you to recognize who is needed to round out the team.

2. Technology that solves pressing needs

TCA defines technology broadly in many industries, including Hardware, Software, Digital Media, Consumer Products and Services, Financial Services, Life Science, CleanTech and Industrial. Regardless of industry, a successful applicant must be able to demonstrate market validation of its technology. Ideally, the company will have revenue and a strong sales pipeline.

3. Niche dominance

You must demonstrate that you can achieve at least a 25% market share in a well-defined niche (i.e., show how you can sell cost-effectively into that niche). The niche can be within an existing market (e.g., Amazon went after the on-line niche for booksellers); or it can be a new niche (e.g., Gadzoox Networks pioneered and coined the SAN niche – Storage Area Networks). Grand visions of a multi-billion dollar market is not attractive unless you can convincingly show how you will dominate that market. With few rare exceptions such as eMachines, dominating a billion-dollar market is usually not possible; and in eMachine's case, we doubt many would have believed that they could become the #3 PC company in less than one year.

4. High growth potential

This must be in either a developing market (e.g., Gadzoox Networks forecast the  development of the SAN market based on projected storage needs), or in an existing market. You must present a credible plan for achieving that growth, not a Chinese Glove Syndrome ("there are over a billion Chinese, we will sell 1% of them a pair of gloves at $20/pair, which gives us revenues of $200 million") without supporting data to show how you would sell them.

5. Sustainable competitive advantages

Some examples: a "blocking patent" (that can keep out competition); a vanity number (eg 1-800-WEDDING); a domain name (e.g., buy.com); "first-to-scale" advantage (i.e., show you already are the first company to achieve some scale in a new niche).

6. Exceptional return on investment.

Because TCA members assume a great deal of risk by investing in early stage companies, applicants should be able to make a compelling case for a 10x or better return on investment within 5 years. Investments that are expected to require no more funding than the current round are especially valued.

7. Use of Funds

TCA members look for opportunities where the capital sought will take the company to the next level, and materially increase its valuation. TCA investments often bridge the gap between proof of concept to a larger VC round. A company must be able to demonstrate how it will use members' investment to complete at least some of the following:

  • Proof of concept
  • Prototype of its product or technology
  • Patent filing (for broad patent)
  • Product development
  • Market research
  • Product launch
  • Major contract or customers
  • Management team
  • Reduce other investment risks

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Testimonial

"Tech Coast Angels understood our vision and the market's need for our products long before any traditional VC group would even grant us a meeting."
- Steve Streit, CEO, GreenDot