Juliana Garaizar, managing director of the Houston Angel Network (HAN), sat down with Texas Medical Center Executive Vice President and Chief Strategy and Operating Officer William F. McKeon to look back at the path that led her to Houston and how the HAN has built a successful model for connecting early-stage companies and accredited investors.
Q | Tell us about your early days in Spain.
A | My early days in Spain started by me accidentally landing at a French school since kindergarten. My mom was working at the school opposite to it and after a while she realized that having her daughter at her same school was not such a great idea since I always wanted to be with her. I therefore became bilingual at a very young age, and that kind of totally shaped my mind to be extremely open to other cultures. Since they didn’t have a French high school in Bilbao at that point, I had to go to France to do my high school years before boarding school. Bilbao is about two hours from France, so the whole trip was about two hours to get
to the high school every Monday and then go back on Friday. I really wanted to continue my education in the French university, but my parents objected. During my university degree based in Spain, I decided to do my study abroad with the Erasmus Exchange Program at a university in France, in Nantes. During my last year there, I realized that everybody there was applying to jobs outside of France. I always wanted to have an international career, but thought it would likely be Europe, maybe Brussels, where there are a lot of international jobs. But in Nantes, many students were getting jobs in Southeast Asia, because there is a strong connection between France and Southeast Asia and that destination really inspired me. So there was this international trade program from the Spanish government, and basically they would select people to go and work in the Spanish trade commissions all over the world.
I got selected, so I started my career in Singapore at the International Trade Commission of Spain. I was there for a year and a half and loved it so much, I was like, ‘I want to stay here. There are so many things going on.’ So luckily, I met the head of CitiGroup’s Asia technology office. It turned out that all of the technology in CitiGroup was run from that technology office. They were having a system migration for the credit card systems, so they put together a huge department. It was called the ICC, International Credit Card Center. And they needed a project manager for that in America, because nobody there spoke Spanish and was able to understand the business side of things. So I got hired and was doing that for almost four years. I had to travel to Latin America quite a bit, and it was great. And then we started with the migration in Europe. We started with Spain. But then I had to go to Greece a lot, and I ended up doing the migration for Asia, too, and I spent quite some time in Japan.
So it was great because I was able to travel a lot and meet a lot of people and different kinds of businesses. But I always had to interact with programmers, so I would go there, check what they required in terms of business requirements, and then I had to go and ask the programmers to shift them. At some point, they said, ‘You know, it would be great if you would be the only person there, and actually could also fix the programming yourself.’ I didn’t want to be a programmer, so I got to a point where I said, ‘I’m ready to do my next thing. And I don’t know what it is, so I am going to go get an MBA.’ The only thing I knew was that it had to be very international oriented. The most international MBA I found was in the London Business School. So that’s where I went and tried to figure out what I wanted to do. Very early on, I started gravitating towards the entrepreneurship major, and actually I did an exchange program during my second year and I went to Berkeley. I went around Silicon Valley and I totally loved it. Right after that, I was very lucky that I got hired to run an incubator in the South of France. In the French Riviera, they have a very big techno park there called Sophia Antipolis, and so I was hired for that. I got in touch with their Angel Network, and one year after being in the French Riviera, I got to run that, too. Which was really cool because in my time there, we did amazing things. First of all, we invested very internationally. Most of my members were not actually French. They were people from all over the world who decided to retire in the French Riviera. So we got deals from all over the world. We were one of the first investors in e-Trade—we invested in Turkey, Ireland, the U.K. and China.
Q | Your husband works for Shell, right?
A | Yes. I met my husband in Singapore. We were friends of friends. Each one had our significant other at the time. He was working for a pipeline company, Tenaris. He had to move out of Singapore, and for two years he was working all over Nigeria and France, and I was still working in Singapore. And totally coincidentally, we met again at the London Business School.
So I finished one year before him because I was in the 2005 MBA, and he was in the 2006. I got my job in the French Riviera, and he got his job in The Hague for Shell. We were doing the long distance relationship and in 2010, I got offered this job to run the European Business Angel Network from Brussels. But I had to turn down the offer because my husband was offered
a great job in Houston.
Q | When you arrived in Houston, what was your perception of the city?
A | I was coming from the French Riviera, and it is really beautiful. It’s one of the best places in the world. You have the Alps coming into the sea. You have these amazing Italian villas. So I remember coming in with my huge belly and getting into the car with my husband, and I remember being so scared of these highways. Maybe it was because I was pregnant too, but I thought there was no way I could drive here. This was way too much. And then I would see all of these malls and buildings all looked the same. And I thought, ‘This is a really ugly place I’m getting into.’ So that was my first perception.
But I found that people were extremely nice, compared to the French who are not, particularly if you are a foreigner. And not only that, they don’t have anything that is kid friendly. And here everyone was so nice that at first I thought that they were trying to play a joke on me. So I thought that was amazing, and everything was kid oriented. That totally sold me.
I was lucky enough that one of the companies we invested with, Success Europe, was actually a French company that needed the money to establish themselves here in Houston. So my past chairman told me, ‘You need to contact them. I’m sure they will need your help in Houston, so whenever you are ready, just go for it.’
And when my son was about seven months old, I approached them and they said, ‘Yeah, we would love your help.’ Actually, they were doing great here in Houston, and they were doing so good that they wanted to expand and maybe try the American route, too. It was a software provider for the big oil and gas companies, energy services companies and environmental companies. So this company, Amalto Technologies, needed a second round, and their European investors were ready to invest. But they wanted some local investors because they said, ‘We are servicing the oil and gas companies, and we want to have these kind of people on board who can open those doors for us. So we need smart money.’
And they told me, ‘You are the perfect person to start reaching out and trying some fundraising.’ So that’s how I approached the Houston Angel Network (HAN). I had met Kala Marathi—HAN’s past MD previously. She invited me to a breakfast, and I told her I had a few deals that could be interesting. We were doing pretty well and we had already invested in them, and we wanted to co-invest with HAN. Kala was not replying to my emails, so I went to the HAN website to get her number and give her a call. And on the website, suddenly there was a huge announcement that they needed a new managing director. I called David Steakley, who was in charge of the whole selection process, and I said, ‘Is this still open?’ And he said, ‘Tomorrow is our last day of interviews.’ I got the job and started working for HAN in January 2013. So this is my third year.
Q | What was the size of HAN at that time?
A | I think we started at around 60 members renewing, and we got up to 90. When the board took place, they made a few strategic changes that they wanted me to implement. One of them was getting rid of the fees for entrepreneurs, and the second part of that deal would be raising the fees for investors. For 10 years, investors were charged a yearly fee of $1,500. Because we were getting rid of the fees for entrepreneurs, we wanted to compensate for that somehow, and we decided to raise to $1,750. We knew that for the least active members who were doing that more for social reasons, it would kind of be a make or break. So that was a pretty big bet for the new board.
Q | How would you describe the Houston Angel Network?
A | HAN has changed a lot over the years, and I think that’s an interesting part. We have totally changed the perception that entrepreneurs had of HAN. Because, of course, I was getting a lot of feedback from entrepreneurs for what HAN meant to them. And HAN meant a pretty elite class of people who would meet every month at the Houstonian, and would only approach entrepreneurs that had a very clear model, and most of them were revenue-generating deals. So if you were before that, it was very difficult to get there. The only route was basically applying. And if you were getting a pitch slot, then you would get access to them. But if not, there was no feedback, there was no, ‘What can we do?’ if you are not selected.
So things have changed a lot. First of all, we decided to get rid of the entrepreneur fees. We decided to get more engaged investors. Another thing that we also did was try to be more open to entrepreneurs. When we got rid of the fees, we got better deal flow, because more deals could apply to us. And we decided that we wanted to see deals that not only had revenue, but also some of the deals that maybe were not on revenue yet but we thought could be interesting. Another thing we decided to do was if you are not making the cut for pitch, we are going to give you some feedback. We are going to point you in the right direction, and we want you to reach out to us again whenever you feel you are ready. So in many cases, we were giving more advice than before, and we kept in close contact with them. That’s also helped out a lot. And we have invested in companies that the first time they came to us was two years ago, and now we have finally invested in them. Because we keep that door open.
Q | If you broke up the companies by industry, what are your largest areas of engagement? Is it largely energy? Is it energy and health?
A | So, we have always been very strong in energy. Surge was actually an initiative that came out of HAN members and HAN invested around 70 percent of Surge 1 and 2. We have been mentoring most of the companies in these first stages of Surge, so we have invested a lot in the Surge fund, and also in follow-on investments in specific Surge companies. That was a pretty obvious fit for us because many of the people were having some connection to the energy industry. Then, there seems to be a legacy in consumer goods, mainly food and beverage deals. And I think that’s because of the Sweet Leaf Tea deal that got a very good exit. So that created a sort of Sweet Leaf Tea effect where they kept on investing in the spin-offs of the Sweet Leaf Tea. And that’s something that I think is also pretty attractive for new members because it’s something that is easy to understand. We also invest a lot in IT and life sciences.
The year that I came in, one of the initiatives that was pretty strategic to us was also to create sub-interest groups. So the sub-interest groups would help us to do the due diligence and do the vetting. It would be a sort of investment committee. But more importantly, it would be an educational tool for members who wanted to know more about those sectors. So we found out we had a lot of energy people who were interested in the life sciences deals, but of course they wouldn’t dare invest in those deals. With these sub-interest group meetings and the fact that some of them were about trends and training people on what were the hot places to invest in the life sciences as an Angel, many of them became more comfortable with investing in life sciences, and that has been instrumental for HAN. And we are aiming to have a third of our portfolio in life sciences. Three years ago we were nowhere near that, and now today we had our agenda planning session where we select the deals for the pitching session in two weeks and I would say 70 percent of the deals we saw were health related—either health IT or life sciences. So that was awesome.
For the life sciences and the energy, we were getting so much traction in terms of deals that we decided to split them and we had oil and gas and energy tech, so we have a chair of energy tech, which is taking care of the group and of the deals. And the same thing happened with the life sciences. Now we have health IT chair, because it’s very different from the rest. So that means that we have further divided.
In terms of IT, by itself, we were investing in a lot of B2B players, but we wanted to diversify, and do a little bit of B2C. We were reaching out to Austin and California to get those kinds of deals. So we have been co-investing a lot with different Angels to try to get those deals. And now we have a committee in place and the co-chairs are very versed in B2C deals, and all of that, so we are getting better deal flow.
Q | It seems there are a lot of exciting things happening in this city right now, and I’m sure you see a lot of them in your role. The Texas Medical Center, for one, is investing heavily in innovation…
A | I have to say that I have been so lucky in terms of timing, because all of these things have been put together in the last three years, and that’s when I came in, so we could engage since the very beginning with these amazing accelerators and programs put together and that are really developing the ecosystem. Again, now we are a lot about collaborating and creating a stronger ecosystem, so we really want to have HAN members involved from the inception, as mentors, but also as presenters, doing the accelerator programs, being able to coach, being there for demo day, and giving a lot of feedback.
Instead of having to fish for deals, whenever a demo day is put together, we have amazing deal flow quality that has already been pre-filtered and comes to you. It has nothing to do with the way it was before.
Q | What do you see for the future for HAN?
A | The future for HAN, for sure, there are a few things that I think are going to be important for us. First, consolidating our number one position as an Angel Network in the U.S., then our relationship with the Texas Halo Fund, our sidecar fund. THF 1 is closing, so they are doing the last deals and follow up investments. We want to put together a THF 2, and we really believe that we want to improve some of the processes, and also the relationship between HAN and THF, to make it more like a hybrid than it is now.
We have realized a few things with THF 1, and one of them is that although THF 1 had been designed to follow HAN, it was more the other way around. HAN members are very interested in what THF has to
say about a deal. They ask, ‘Would you follow me if I invested?’ So that’s very important. At the end of the day, what’s really happening is that THF is very heavily signaling the deals, and HAN is following Halo, and I think we want to make that change effective for THF 2. And another thing that we want to do is make it a slightly bigger fund. Our main investors for THF 1 were Angels, not only from HAN, but also from the Alliance of Texas Angel Networks that we created. I think this time, we want to be able to reach out to private equity, not only because we want them as investors, but also we want to have a clear exit strategy from the beginning, so those people know what our investments are and see a clear path to exit.