McALLEN — Three years ago Chad Nunnery and his business, Composite Access Products, had a problem.
Nunnery and CAP, which he started in 2015, mold fiberglass composite manhole covers, which are resistant to corrosion, not subject to theft for scrap and environmentally friendly because of sanitary sewer backflow problems the watertight covers can solve.
They’re the only ones who use their process for making the covers in the U.S., and cities across the nation had taken notice and were buying the covers.
Nonetheless, in 2017 Nunnery found himself in a pickle: he was out of capital.
“When I first started this, I’d saved up a lot of money, but used all of it. Got some partners and they put in a lot of money, and we eventually said, ‘We need more money,’” he chuckled.
Nunnery ultimately found the solution to his dilemma with the RGV Angel Network.
A nonprofit, the network is a collection of individual accredited investors interested in funding privately held and scalable startup companies, providing a platform for entrepreneurs to raise capital in exchange for equity.
Essentially, it connects Valley investors with businesses to invest in.
The group picks out investment opportunities at a Shark Tank-esque pitch night — sans corny gimmicks but with more serious looking presentations — letting inventors and innovators describe why their businesses will be a success and responding to probing questions about the minutiae of the pitch.
“You used to be able to go to a commercial bank with a good business idea and you could walk in and borrow money, startup money, and get your business going, and they were willing to take a risk with you,” said John Martin, the group’s board chairman. “Today, none of the banks will take that risk with a startup company, so we’re actually filling in where the banks used to be.”
Nunnery rolled a sample manhole cover into one of the network’s pitch nights after a high-tech pitch for some kind of phone app that preceded him.
“You know, I’m simple,” he told his prospective investors. “I make manhole covers.”
The investors were interested and they invited Nunnery back for a more lengthy conversation. Eventually they got involved and lined him up with the capital he was looking for.
Nunnery came back to them in 2018 and they put even more money behind his business.
“This time they more than doubled the amount they invested the first time in us, so with the Martins and that group of investors, they really have shown a lot of support, a lot of trust, and this year we’ve been all in the black,” he said. “So we’ve turned the corner, now we’re making money and now we’re getting approvals by three to five cities a week, and it’s really looking great for 2021.”
According to Nunnery, who now has a dozen employees and is actively hiring more, that influx of cash was key.
“The timing was critical,” he said. “At that moment we were running on fumes, and we needed to have something happen. Without their help I would have come up with another solution, I think, but I can’t even think what that would be.”
Martin, a former business professor at UTPA, says in many ways Nunnery’s success is what the network was founded to fuel.
“They started selling their first manhole covers in like 2017, and this year it looks like we’re going to finish the year with $1.7 million in sales,” he said.
So far the network has invested just shy of $1 million in 11 companies.
Before a pitch night last week, the investors talked about the businesses they had put money in. Some sounded like they were practically money printing presses. Others were duds, the network couldn’t even get their representatives to return a phone call.
Largely though, Martin says the network does a good job of pairing investors with businesses in a way that works for everyone.
“We want to invest in good quality companies and help them grow,” he said.
What the RGV Angel Network hasn’t been as successful at is finding local enterprises to invest in. Nunnery and CAP are an outlier — most of those 11 companies the network has backed are located out of the Valley, and the investors rarely hear a pitch from a local.
“We really want to focus on the Valley and we want to help support entrepreneurs here; so far we’ve not had a lot of them,” Martin said.
Pairing his investors’ capital with entrepreneurs could energize the local business scene, Martin said, growing jobs and industry in the Valley by helping tycoons the way the network helped Nunnery and CAP.
“I love entrepreneurs, and I like job creating,” he said. “To me, if you can create jobs and you can create wealth, and you can create business entities that become successful and create more wealth and more jobs, you’ve done a great thing for the Valley.”
More information on the RGV Angel Investor Network is available at http://www.rgvan.org.