One of the world’s largest and most active angel investment networks has landed in North Texas, marking the global organization’s first chapter in the Lone Star State.

Keiretsu Forum, a network of angel investor groups spanning over 50 chapters across four continents, is launching its inaugural Texas operation with the local leadership of veteran investment banker Kirk Otis. As president of the North Texas Keiretsu Forum chapter, Otis aims to fill a gap in early-stage capital for the region’s entrepreneurs while giving accredited investors access to a vetted deal flow.

“North Texas needs more funding sources,” said Otis, who is principal at investment bank Hawkeye Capital Partners.

Otis plans to bring together founders and funders to benefit investors and entrepreneurs alike.

With a global reach and over 3,000 members, Keiretsu Forum has invested over $1 billion in more than 2,400 companies since its inception, according to the organization. The North Texas chapter looks to leverage the broader organization’s resources while focusing on the local startup community, Otis told Dallas Innovates.

No. 1 “most active” angel in the U.S.—and No. 2 in Texas

The name Keiretsu comes from a Japanese word for a group of affiliated companies with “broad power and reach” working together. Founded in 2000 in San Francisco by Randy Williams, Keiretsu Forum aims to provide a similar community for angel investors, VCs, and corporate investors through its chapters worldwide.

Founder Williams, president of Keiretsu Forum, said in a statement the new North Texas chapter will bring the group’s “innovative model for early-stage investing and exceptional deal flow” to North Texas.

By transaction volume, Keiretsu Forum is ranked the most active Seed and Series A investor nationally in the 2022 HALO Report from the Angel Resource Institute. In Texas, the angel network earned the No. 2 spot for deal flow in Texas, just behind Houston Angels.

According to the report, 60% of angel investment in Texas is funded locally, and 40% of deals come from outside the state.

North Texas Chapter President Otis noted Keiretsu’s already “substantial share” of Texas deal flow with investments in companies such as Maxwell Biosciences, Corinnova Inc., and Wavetech Group.

“Our goal is to continue cultivating deal flow within the North Texas ecosystem, connecting founders and funders while leveraging the extensive Keiretsu Forum network,” Otis said.

As the local “boots on the ground” for the past 10 months, Otis is spearheading the launch of the North Texas chapter, backed by Keiretsu Forum’s heavyweight leadership.

TEN Capital CEO Hall Martin was named vice president of Keiretsu’s Texas region.

Key players in the effort include Howard Lubert, regional president of Keiretsu Forum’s Mid-Atlantic and Southeast regions, who expanded the angel network to those regions in 2011. Elsewhere in Texas, Austin-based Hall Martin, who founded the Central Texas Angel Network in 2006 and TEN Capital in 2009, was recently named vice president of the Texas region.

“Working with Keiretsu Forum, I can bring access to a broader range of experienced advisors and investors, streamline the process of raising capital, and enhance local investor portfolios with a diverse stream of deal flow,” Martin said in a statement.

Laser focus on “Seed-plus” funding gap

“Entrepreneurs with good ideas spend too much time chasing funding,” North Texas President Otis said.

The North Texas Keiretsu Forum aims to fill a “critical gap” for entrepreneurs needing growth capital in the $1 to $3 million range. As Otis explains, “Our focus is not seed. And it’s not Series A. We want to provide a bridge between early angel investments and later-stage venture rounds.”

He calls it a “Seed-plus round,” which is also referred to as pre-Series A or post-seed follow-on funding.

Otis says seed capital, including the support of friends and family, can become even more potent when investors know there are funders at the “next rung of the capital ladder.”

Keiretsu takes a cooperative stance in working with other funders, according to Otis. “Our strategy is to partner with other firms—not to compete with them. We want to help them win a syndicate for the next round,” the North Texas president said.

Booming startup scene; growth capital needed

“We think the biggest opportunity in the state is in North Texas,” Otis said.

The region edged out Houston and Central Texas because Keiretsu saw it as the ripest place for additional angel activity.

The opportunity for Keiretsu Forum is plentiful, Otis says, given the vibrant startup activity in North Texas coupled with a relative lack of follow-on capital to help fledgling companies scale past product-market fit.

Otis aims to recruit around 20 qualified angel investors by year end as founding members of the new North Texas chapter.

Chapter sizes of the Keiretsu Forum vary, with larger groups of up to 150 members in markets like Seattle. The North Texas chapter can grow, Otis says, but having engaged members for diligence and deal syndication is more important than raw numbers.

“Diligence rigor” and curated deal flow

Angels want investment opportunity but what makes angels successful is “No. 1 Diligence and No. 2: Diversification,” Otis notes.

Those two factors, along with a curated deal flow are “central to Keiretsu’s value proposition,” Otis said.

The group sees roughly 50 applications from companies each month, which gets filtered down to just four quality deals presented at each monthly meeting. Otis explains that this respects members’ time while ensuring they see credible opportunities.

Otis says global Keiretsu Forum members consistently cite diligence as a top benefit. The organization has dedicated staff to support due diligence, with minimum standards to ensure investments are thoroughly vetted.

For complex deals, Keiretsu’s depth of expertise across 2000-plus members internationally enables forming diligence teams with specialized knowledge in domains like life sciences, manufacturing, regulation, and more, Otis says.

Ultimately, Keiretsu’s “curated deal flow and diligence rigor” attracts members who want to invest confidently and promising companies seeking capital, Otis says.

“Because we have a history of funding, it attracts companies that are looking to be funded,” he said. “We have a good screening process and create a good deal flow. Second, we’re known for diligence.”

Targeting accredited investors

Given SEC regulations around general solicitation of unaccredited investors, the Keiretsu Forum membership is restricted to qualified angel investors.

“Our focus is looking for accredited investors that are interested in investing in companies at this stage,” said Otis.

The minimums for accredited investor status include having $1 million in net worth or earning $200k individually/$300k jointly over the past two years, according to the group.

Worldwide network enables diversification

Keiretsu Forum emphasizes diversification as a key benefit of membership, Otis says. “Members can easily invest in companies in different industries and in different regions,” he said.

With chapters worldwide covering most major regions and industries, members can readily access deals across different geographies, sectors, and stages.

The angel network model shifts the paradigm of local angels only investing locally. Keiretsu Forum prides itself on providing portfolio companies with access to different capital markets through its international footprint.

For example, Otis notes 60% of Keiretsu’s investments have been in the life sciences space—a sector with limited exposure in Texas. “Keiretsu offers that diversification,” he said.

Local support

FBFK Shareholder Jim Davis [Courtesy photo]

The new Keiretsu chapter found early support in law firm FBFK, which will serve as the host sponsor in North Texas. James Davis, a shareholder at law firm FBFK and the primary liaison with Keiretsu, sees the group as a “much-needed addition to the entrepreneurial ecosystem of North Texas.”

Davis hopes investors and service providers will rally behind the new North Texas Chapter of the Keiretsu Forum for the benefit of the entire area.”

“As a law firm with a significant corporate, M&A, and financing practice, we are keenly aware of the need in North Texas for additional sources of capital for early-stage companies of all types,” he said.

Initially, the North Texas Keiretsu Forum will host virtual screening, forum, and educational workshops online and live in-person meetings hosted in Plano by FBFK— 11 in total, says Otis.

Chapter members will discuss active deal flow in North Texas and the national Keiretsu deal flow in active funding. 

“Once you’re a member, you have access to all of the Keiretsu deal flow and diligence from other chapters,” he said, adding that recordings and diligence reports may be accessed.

According to Keiretsu Forum’s website, the organization invests in sectors such as health care, consumer products, real estate, and emerging technologies. Ideal startups have recurring revenue streams, market opportunity, strong management, and a clear path to profitability within two years.

First meeting September 28

The first North Texas Keiretsu Forum meeting will be held on September 28 at the Plano offices of FBFK, the chapter’s lead sponsor. FBFK is providing the venue and food for monthly meetings.

Meetings will be “run efficiently,” each about two-and-a-half hours, Otis says.

The group has a structured approach to filtering deal flow, facilitating diligence, and leveraging expertise across the member network to make good use of members’ time.

Presenting companies in September will likely be sourced from Keiretsu Forum chapters on the coasts, as it takes time to prepare local companies, Otis says. He expects to see increasing numbers of local startups at future meetings as Texas companies learn about the new funding opportunity.

Overall, Otis says, Keiretsu Forum’s North Texas launch aims to activate accredited investors to support the next wave of Lone Star State startups hungry for growth capital.

“That’s what we’re trying to help solve,” he said. “I think there’s so much opportunity here.”

To learn more

For more information about the Keiretsu Forum’s North Texas Chapter, entrepreneurs, and prospective members can learn more by contacting Kirk Otis.

Get on the list.
Dallas Innovates, every day.

Sign up to keep your eye on what’s new and next in Dallas-Fort Worth, every day.