Why “early stage” (not “seed” or “growth” stages)?
We use “early stage” to mean companies that are beyond just an idea, have a team in place, have created a business plan and strategy, and can provide some evidence of traction (ideally some initial revenue). They do not necessarily have a long history, wide user base, or profitable operations.
We think early stage is a good place to invest. It is impossible to judge whether an idea will be successful, so “seed investing” is too hard for us. Having some evidence of traction or a product / market fit – enough to give us at least some estimate of the potential of a company – mitigates some of the investment risk. Even then, we know we will make some investment mistakes, but there is less guess work.
On the later-stage “growth” side, VCs typically need to a lot more traction and deploy much more capital. This means they write larger checks at higher valuations, and therefore need bigger exits to generate good returns. This can obviously be extremely successful. But there are not many large VC funds in the Carolinas, suggesting it’s hard to do it here (for reasons that go beyond this post). Hence we focus on early stage companies.