The majority of angel investors - some extra explanation

You probably noticed a few italicized words in that last post. Different cuts of data tell different stories, so in the interests of full disclosure here is more explanation of the data I used.

Through VentureSouth. This excludes any investments individuals made on their own, either before or after being VentureSouth members, or while members but outside of VentureSouth deals. You could argue that I’m cherry-picking the best data by only including VentureSouth performance, when wider data would be more appropriate. If you argue that, you’re saying that people make better investments through VentureSouth than on their own – so the logical conclusion is you had better visit our enrollment page to sign up…

Still, it is a reasonable objection. We have a bit more insight into some of these investors’ portfolios, as we have some data from them about their angel investing experience, and we sometimes see their names on other cap tables, but not enough to be certain about full track records. Nevertheless, it would take a lot of investors making wrong decisions outside of VentureSouth to change the proportion materially.

in aggregate…. I think David means his angel acquaintances have lost money in aggregate, not on any given deal. Of course, we all know angels that have lost money on a particular investment – it’s happened plenty of times here and will happen plenty more – but I’m sure a single deal loss isn’t what David meant.

so far. I’ve included here (a) investors who have lost money on realized investments but still have active investments in play and (b) investors who have made money so far but whose portfolios include some active companies that seem unlikely to generate a positive return. Several of the first group are on track to “rescue” their positions with a payoff from their remaining portfolios, and things might improve for those in the second; but as future payoffs are estimates, I’ve included both of those groups in our data as a “worst case” proportion.

(before fees). I excluded fees (for us, membership dues and carried interest) from this data. These are small relative to the invested capital and returns, so while they might reduce the net aggregate return, they are unlikely to move an individual from the “made money” category to the “lost money”– and certainly not enough individuals to impact the proportion in each group materially.

The majority of angel investors I know have NOT lost money investing in startups through VentureSouth

Following from yesterday: as of writing, 389 angel investors have invested in one or more companies through VentureSouth since the first investment in 2008.

Of those 389 angels, only 40 investors (10.3%) have lost money in aggregate (before fees) over their VentureSouth investments so far, or seem likely to lose money based on their portfolios’ trajectories.

So, have the majority of angel investors we know lost money in startups? Definitively NO: 90% of angels we know have not lost money investing in startups with VentureSouth.

Of course, life is more complicated than the short answer, so we’ll add some nuances in a follow-up post.

"The majority of angel investors I know have lost money investing in startups."

David Cummings’ post are always thought-provoking. His post a few days ago (about revenue-based financing, followed-up last week) started off in an interesting way.

  • “Investing in startups is a great way to lose money.”

  • “The majority of angel investors I know have lost money investing in startups.”

Is that really true? Can that be true and the studies of the returns for angel investing (like those described by us here) be accurate? And what about me: have the majority of angel investors I know lost money investing in startups?

I don’t know the same angel investors as David, so I can’t answer the first two questions. But the introduction made me wonder if data are available on the proportion of angel investors that lose money. I don’t know of, and haven’t found, any studies specifically about that.

So, to try to quantify the “risk” of angel investing in a new way, here are some data from the first decade at VentureSouth to answer the last question: have the majority of angel investors we know lost money in startups? Posts coming over the next few days will answer that.

And if you would like to share your results with us, publicly or privately, we would love to help add this dataset to the expanding data available on other aspects of angel investing.

A thank you from the VentureSouth team

Over the last few days we’ve been enjoying some positive accolades from our investing activity so far this year and from the Angel Capital Association for being a top 10 angel group in North America.

As we head back from the “summer break”, Matt, Charlie, and I wanted to pause to thank those that make these headlines possible.

First, our full time team at VentureSouth headquarters: Cara - our investor relations director who makes sure our members know what is happening on these investments; Caroline – our financial controller who makes sure the right money is in the right place at the right time; our interns Alex, Ryan, and Baylen who have helped in innumerable ways during our due diligence processes. We could not keep growing VentureSouth without you.

Second, our market leaders that fly the VentureSouth duck in cities from Greensboro to Hilton Head: you can learn more about them on our team page, but for now we are privileged to have such dedicated individuals supporting VentureSouth across the Carolinas.

Thirdly, our 350 members, whose constant leaps of faith to back early stage startups in the southeast keep VentureSouth – and its 49 active portfolio companies – in business.

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To the myriad of other supporters – from Southern First Bank to the Appalachian Regional Commission to the South Carolina Department of Commerce to the Angel Capital Association to our board members – that have helped VentureSouth get to where it is today.

To the unbelievable portfolio company entrepreneurs who make it hard to say “no”.

And lastly and most importantly to our families – the three wives, nine children, innumerable dogs, cats, and (previously) bearded dragons – for whom we do this and without whom we couldn’t.

Thank you – and here’s to even better returns for the rest of the year!


The Formula Behind the Record-Breaking Results

Last week, we were proud to announce that this year has seen record-breaking investment activity at VentureSouth. As of the end of June, our members have invested nearly $5 million into startup companies in our region this year, 24% more than in the same period last year.

The press coverage covered the basics of what those investments funded: 17 companies, both new investments and existing portfolio companies. But we thought you might enjoy hearing more about what we funded, and offer three things that investors and entrepreneurs can learn about VentureSouth from that extra information.

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First, 17 companies: that’s the largest number of companies that we have funded during a six-month period. We invested in four new ones (Aperiomics, OffSite, Treis Blockchain, and Zylö) – a pretty typical number of new investments, as we expect to make 6-8 new investments every year. We also funded 13 existing companies, which is higher than usual – 13 vs. 6 in the same period last year. Why so many follow-on deals?

Partly this is from having more portfolio companies in 2019 (49 active companies vs. 46 last year): more companies means more follow-on rounds to consider. Partly it’s from companies wisely raising capital while they can – the portfolio is performing well and the US economy and funding environment seems strong. And partly it’s from rounds being left open. As we attract more members to VentureSouth, they can participate “late” in rounds that were already reviewed and funded by existing members.

  • Investors: you can participate in a wide variety of potential companies as part of VentureSouth. There’s rarely a shortage of interesting things to consider. Right now, our open rounds page lists 10 companies for your review.

  • Entrepreneurs: VentureSouth funds companies regularly, and we fund companies repeatedly (even without a committed capital fund that deliberately reserves “dry powder”).

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Second, of the $4.8 million invested so far in 2019, $2.2 million (46%) went into new investments – an average of $550k each, which is pretty typical for VentureSouth. Three of the four investments were “led” by VentureSouth (meaning we set the term sheet, supervised writing the investment documents, and were one of the largest investors).

  • Investors: VentureSouth rounds regularly get well funded when VentureSouth is involved, which sets them up for more success – more time spent executing their plans and less time spent fundraising.

  • Entrepreneurs: VentureSouth funds companies regularly, frequently invests $500k+ in deals we like, and we lead deals! (Early-stage investors willing to write term sheets and lead deals can be tough to find around here…)

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Third, 36% was put to work in 1Q and 64% in 2Q. In 2018, the split was 10% / 90% between those quarters last year. Not sure what anyone can learn from that!

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Lastly, 68% of the funds were deployed in “health” related startups. This was quite a bit higher than last year (39%). That wasn’t a deliberate focus for us, perhaps more a function of a relatively small sample size. But our members do like health-related companies, for reasons that you can probably understand – they frequently have large addressable markets, high scientific or technical barriers to entry and IP protection, and tangible stories that people can “get”.

Within health, a lot of our focus is on “diagnostic platforms” – Aperiomics using a next-generation-sequencing approach to infectious disease diagnosis; KIYATEC with a platform for growing tumors from biopsies and using them to predict with 100% accuracy which drug will kill which tumor; or UVision with its hysteroscope for uterine diagnosis.

  • Investors: VentureSouth companies help transform lives – a key part of our “Make Money. Have Fun. Do Good” motto.

  • Entrepreneurs: If you have a health-related startup, call us; if not, call us anyway!

Play Ball

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We stay incredibly busy at VentureSouth. We’re on another record-breaking pace for investments this year. We’re adding two additional locations in Wilmington, NC and Hilton Head, SC. We’re hiring additional positions that need proper training and onboarding. Venture Carolina, our educational non-profit, is growing and attracting significant potential grant funding, etc., etc., etc.  

Matt, Paul, and I truly love what we do, so we typically except the fact, with smiles on our faces, that we’re constantly in a state where our personal bandwidth is stretched to the max. The three of us are also devoted fathers and husbands, so a family-oriented culture within VentureSouth is a big deal to us. 

Last week, our investors, staff, and families got together for a night at Fluor Field for a Greenville Drive baseball game. It was a fantastic event! It truly epitomized the type of culture we are striving for at VentureSouth. Tim Reed and JB Holleman, two of our founding board members, were the honorary game captains. Dan Haight, our current board chair was the ceremonial “Play Ball!” guy, and Matt threw out the first pitch (it wasn’t a strike, but that’s another story). It really was fantastic.

Brody at the Greenville Drive

Brody at the Greenville Drive

However, the thing that stands out the most to me is a comment that Caroline Efird, our Controller, made to me that night. Caroline’s son, Brody, a super cool 8-year-old boy, got to be a bat boy that night along with Matt’s son, Coleman. To say Brody was excited is the understatement of the year. He was PUMPED! Caroline’s comment to me was “Brody will remember this for the rest of his life.” 

I honestly hope Brody does. 

This isn’t a blog post to pat our own backs for building a company with a family-oriented culture. It’s a call to action for any entrepreneurs who are building companies to remind them that the culture you weave into the fabric of your company matters, and in some cases, can provide life-long memories.

Play Ball! 

Charlie Banks, Managing Director

VentureSouth in the Top 10!

Last week at the annual Angel Capital Association Summit in Chicago, we were thrilled when VentureSouth was announced as one of the Top 10 angel investment groups in North America! 

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In a preview of the soon-to-be-released 2018 Angel Funders Report, the ACA revealed that among reporting groups, VentureSouth was one of the ten most prolific by dollars invested last year.  

We invested $7 million in 22 companies in 2018 – a record for us and a great testament to the hard work of the entire VentureSouth team, our highly active network of 300 angel members, and a robust pipeline of Southeastern startups led by talented but unsung entrepreneurs.  It’s a great honor for our group here in the Carolinas to be recognized alongside leading national groups from markets like California, Boston, New York and Texas. 

We also want to say thank you to the Angel Capital Association team for putting on another great Summit this year. The organization works extremely hard to support the growth of angel investing, and we would not be where we are today without the knowledge, relationships and public policy leadership the ACA provides.   

It was especially fitting that retiring ACA Executive Director Marianne Hudson was honored with the Hans Severiens Award at the Summit for her many years of dedicated leadership and service in advancing the field of angel investing.  Congratulations Marianne on a well-deserved honor and thank you for all your hard work on behalf of angel investors!

Learn more about becoming involved with VentureSouth’s story in 2019 on the rest of our website, or sign up here.

How to pitch tips - a wrap

Back in December of 2016, we started the “Perfecting Your Pitch” series in conjunction with finishing our magnum opus “Perfecting Your Pitch: 101 Tips for Pitching to Angel Investors”. This book remains, without doubt, the best 101 pitching tips you can buy from an angel group beginning with V.

Over the last 18 months we have shared most of these tips with you via twitter, our blog, and the book itself.

We’d love to hear what you’ve learned from it and what else you think we should cover.

In exchange, here are a few things we’ve learned.

First, the vast majority of entrepreneurs seeking capital from us have not read it. This remains a puzzle. If you want someone to write you a check, how can you not research what they are looking for? It costs double in gas to drive to our screening pitch than to get the guide to exactly what we want to hear! Principle #2 failed already.

Second, it’s completely obvious when people have read it. It’s shown in small ways: at our April screening meeting, the best pitcher’s second sentence concluded with “…and I’m here today to tell you about the $750,000 angel round we are raising”. Tip #76 digested and executed.

It’s shown in larger ways too: some pitches are really excellent. While we still have the problem of great ideas being poorly delivered, we are increasingly facing the challenge of moderately good ideas being pitched really well. This is a lot more fun.

Third, blogging regularly (and content marketing) is hard – but feedback is gratifying. Thanks David N and Amazon Customer!

Fourth, we covered a lot of ground over the course of those tips. But in almost every pitch since we’ve seen or heard something and thought “that should’ve gone in the book”. Here’s the good news: we wrote most of those down, so look out for some bonus tips this summer.

Lastly, we’ve learned that we still have great respect for most entrepreneurs. Being willing to risk embarrassment, financial hardship, long lonely hours pursuing a dream unappreciated by everyone deserves recognition. We hope the pitches make that challenge a little less challenging and a little more rewarding.

Make Money. Have Fun. Do Good. A Vendor Registry case study.

Our motto is Make Money. Have Fun. Do Good.

These things can happen at the same time. The FarmShots acquisition, for example, Made Money from an attractive investment return on a company Doing Good in improving farm yields, reducing crop losses, and making food cheaper.

For Do Good, a lot of attention on "startups' impact" is focused on job creation, which is great - startups create all net new jobs. But there are underappreciated effects from improved technologies from startups impacting our region. This case study shows one.

Vendor Registry provides a platform for local government entities to procure services more efficiently. This is how they saved Myrtle Beach $90,000.

New technology saves a local government $90,000 on one project. That's $90,000 saved for other improvements to Myrtle Beach; or $90,000 off the burden for local taxpayers. Done Good.

And at the same time provided a way for a smaller nearby company to find new business. Done Good.

Scale that up across the $1.6 TRILLION spent by local government entities every year and pretty soon you're talking real money! And scale up across the millions of qualified vendors that could be providing services but aren't and pretty soon you're talking local economic development. Done Good.

 

 

VentureSouth 2017 Summit - the other activities

And lastly there are other interesting events going on at the Summit.

We're hearing from Proterra on how it's doing - an amazing example of the power of angel investing, economic development, outside capital, and tremendous hard work.

We're providing our updates to investors in our Palmetto Angel 2014 Fund - because startups have to answer to investors and so do we. Fortunately, we're reporting pretty good news.

And there's cocktails and socializing, challenging Q&A, passionate entrepreneurs, and smart investors. It's going to be a lot of fun.

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That about wraps up why we take on this extra organizational extravaganza between Thanksgiving and Christmas and why in this format.

Last year over 160 people attended and gave us great reviews (and some constructive criticism that we’ve incorporated into this year’s effort). We hope you can join us this time. Sign up here and we’ll look forward to seeing you next week.

Happy Thanksgiving!

VentureSouth 2017 Summit - portfolio review

Third (back off our soapbox), we are dedicating most of our second day to hearing updates from our portfolio companies. An absolute key part of angel group management is keeping track of the portfolio.

At an elementary (and yet surprisingly complex) level, making sure the right investors own the right things, cash is in the right place at the right time, entities are formed and administered at the right time. That’s what members pay for.

But at a more strategic level, you can’t expect a positive return unless you know what’s happening in your investment portfolio. This is (relatively) easy for publicly traded companies that publish quarterly data that you can monitor in your brokerage platform. It’s much harder for private companies. But on the flipside, there is much more you can do to help early-stage companies.

The VentureSouth team is primarily paid through carry: we really get paid only if the investments are successful. We are therefore focused on helping portfolio companies succeed. And obviously investors are too: if you just put $10,000 into a startup, you’re probably happy to make a few calls to help see that $10,000 again.

This help can take many forms and is too long for a blog post. But suffice to say now that hearing in-person updates from companies on what has recently gone well, what hasn’t, what’s next, and how we can help is helpful. We’ll be hearing from nine companies this month – and quizzing them and finding ways to help.

VentureSouth 2017 Summit - the economic development

(2) Our second main workshop is “Angel Investing for Economic Development.” This session aims to tell more people about why angel investing is critical to local economic development efforts.

Why are we doing this workshop? VentureSouth’s primary goal is to make good investments and positive returns for investors. Our motto is “Make Money. Have Fun. Do Good” – in that order – for a reason. But we do believe in the “Do Good” part.

This is achieved in many ways, but an obvious one is that early stage entrepreneurial communities are of great value – and you can’t have one of those without people funding companies.

There are a lot of people in the Carolinas whose job is to promote economic development, from the Department of Commerce, to community foundations, to trade associations, to city council representatives. Many understand the importance of early-stage companies – though the headlines are always on the large manufacturing plant or the multinational company office opening.

Early stage capital providers don't do a great job of explaining the importance of both entrepreneurship and capital to these groups. When we’re introducing VentureSouth to a new audience, for example, we usually discuss job creation data. Did you know that all net new job growth in the US is from early stage companies? It’s true, but you wouldn’t know that from looking at our website. The chart below should, we hope, remedy that.

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So, we welcome anyone with an interest in economic development, entrepreneurial vitality, job creation, wealth creation, and making the Carolinas even greater to come along to learn about a critical but overlooked way of doing that.

VentureSouth 2017 Summit - the education

Second, connecting informed investors and educated entrepreneurs is key to our business model: if either group doesn’t know how to operate, good investments and successful high growth companies are pretty unlikely to result.

Education is therefore a big part of our collective effort at VentureSouth. We do this during our meetings, on our blog, and, most importantly, through Venture Carolina, our “sister” non-profit that provides educational programs for entrepreneurs and, uniquely?, investors across the Carolinas.

Our educational content at the Summit is deep. The workshops being run are not 30-minute superficial chats to scratch the surface of a trend. These are half-day or full-day "events," with curriculum created by leading educators, delivered by experts in their field, tied to learning outcomes, and valuable whether you are just starting out or having been an investor or entrepreneur for many years. Our goal is meaningful and impactful education, not (just) entertainment.

So what’s on the menu this year?

(1) Post-Investment & Boardroom workshop. This is an Angel Resource Institute workshop, which combines the expertise of angel investors and the entrepreneurial depth of the Kauffman Foundation. The workshop is for our members, and for anyone else, that invest in early stage companies, and for anyone who has taken, or plans to take, investment.

We’ll be learning about common issues that arise after investment.

For an investor, how do we match the right board members with this investment? How do I keep an eye on and assist my new “asset” – help guide them on the right path without interfering?

For an entrepreneur, how do I keep my investors content while creating a great business? How do we all keep everyone aligned and moving towards our mutual goal of a great company and a lucrative financial return?

This workshop aims to equip both investors and entrepreneurs with the knowledge and tools to answer these questions. $99 invested today could save A LOT of problems down the line.

We’ll cover more on education in the next post.

VentureSouth 2017 Summit - the format

First, a key selling point of our angel group is that we have so many members – 240 and counting – who can provide an unparalleled depth and breadth of experience when looking at possible investments.

Unlike big groups concentrated in one city, however, our members are spread out, over a five-hour drive if you went straight from VentureSouth Piedmont in Greensboro to Salt Marsh Angels in Hilton Head – so arguably the concentrated power gets diluted by distance.

We’re at our most powerful when our diverse crowd of members meet, know each other, trust each other’s judgment and diligence, and work together effectively. Having everyone come to the same meeting helps do that – and so we very much appreciate the efforts of our “out of town” members coming to Greenville.

And we don’t envy the presenter having to pitch to a ballroom full of investors at this session.

VentureSouth 2017 Summit - why?

Having finished our October angel group meetings and all our kids’ Halloween candy, we are preparing hard for our final group meeting of the year.

In November, though, we change our operating model from monthly meetings in every town to a single large meeting in Greenville, SC – the VentureSouth 2017 Summit.

First, a quick pitch: you can see all the content and logistics on our Summit page here. Several of the sessions are open to the public, most importantly our three educational workshops - How to Pitch, Post-Investment & Boardroom, and Angel Investing for Economic Development. If you see something interesting, sign up and we’ll look forward to seeing you there.

But rather than sales pitches, we try to limit our blog to educational content, so thought you might like to hear why we run our Summit as we do.

There are dozens of startup, entrepreneur, angel, VC, and general tech conferences around the southeast – CED, Dig South, 36|86, ATA workshops, demo days galore, and countless more. So why a “VentureSouth Summit”? The next couple of posts will discuss a few reasons.

Why we don't sign NDAs

Approximately once a week we’ll be asked something along the lines of: “Could I also ask if you would be willing to signed an NDA with [my company].”

And our answer is always “You can ask, but no.” Angel groups do not sign NDAs.

There are many good reasons – Tony Lettich outlined some of the reasons here; Wil Schroter added some others here – but the short reason is “because life’s too short.”

Why does this matter? No harm done in asking, is there? From the entrepreneur’s perspective: we asked, the investor said no, and we’re back to where we’re started.

Well, from our perspective: not quite. The fact of asking us to sign an NDA tells us a few things about this investment opportunity even before we’ve met you – and none of them good.

·        It tells us that you haven’t done your homework. You haven’t reviewed our process page; you haven’t entered “Angel group NDA” into a search engine; you haven’t done the basic research on a key partner on your entrepreneurial journey.  

·        Or perhaps you have – but think it doesn’t apply to you. This tells us you over-estimate the value of your idea or yourself, and in neither instance does that make us want to work with you.

·        It tell us you are not well versed in how to be a startup. If you’re a young first-time entrepreneur, how many more serious “rookie mistakes” are you going to make? Or perhaps you’re too used to the cushy mid-cap middle management world of NDAs, corporate general counsel, and established protocols to thrive in the entrepreneurial world of a startup?

That’s probably too much to read in an innocent question. But when we are evaluating startup companies, we don’t have much information to go on, so every data point you give us becomes crucial. If your first data point tells us you are going to be harder to work with than the next entrepreneur in our pipeline, we probably aren’t going to look for more data.

AngelList Syndicate: Why Back It?

3)     Why should we back your syndicate?

So why would we back your deals? Simply because we are one of the largest, most experienced, professionally-led, and proven angel groups in the United States!

Our full time team have done this for nearly a decade; our over 200 members provide an exceptional pool of brains to analyze companies – and help them grow once we invested; and we’ve sold companies and generated quick exits and positive returns for investors. 

Are there other syndicates looking at SE deals? Not really. We can only find one other syndicate based in a southeastern state (Pomp’s); there are none in SC, GA, TN, AL, WV, KY, and even FL and VA.

The ACA Halo report (pdf) tells us that 12% of angel deals are from the southeast. These are deals not being picked over by every syndicate already. Proprietary dealflow? Check.

And the same report tells us that average valuations for angel deals in the southeast are 20% below national averages - and 25% below New York. Reasonable prices? Check.

What about investments in specific deals? For each opportunity available to our syndicate, we provide a brief “investment thesis” covering what was most attractive about the company in the opinion of our members who chose to invest.

AngelList Syndicate: Why?

2)     Why is VentureSouth doing this?

Why are you doing it? We have several reasons for attempting to create our AngelList syndicate.

First, it’s an experiment to see if we can. There are very few syndicates outside of Silicon Valley and NYC. We’re hoping to prove that they can be a valuable structure in underserved markets like the Carolinas.

Second, everyone recognizes the perennial “lack of capital” problem in the Southeast. There are only so many people interested in angel investing, and only so many in-person angel groups that we can operate cost-effectively. This might be a way to increase the amount of capital available for startups without requiring new infrastructure (or government handouts).

Third, to help the portfolio companies in which we invest raise their profile in the funding communities outside of the Carolinas

Fourth, to expand VentureSouth’s reach to potential investors outside of our physical groups. We don’t have groups in smaller and larger markets that are uneconomical for us to reach … but now people in those places can access (some of) our deal opportunities if they like the look of them.

Lastly, for fun. This seems like something that we would enjoy doing.

Aren’t you a bit late to this party?  Yes. Brad Feld did his three years ago, and other syndicates have been around a while and proven to be interesting. However, we are treading new ground as there few syndicates looking at southeastern deals, and we are always interested in ways to make angel investing more accessible and lucrative for investors.

AngelList Syndicate: How It Works

This week, VentureSouth is launching our AngelList syndicate. You can learn more about it on AngelList, our website overview page, and in a series of blog posts explaining how it works, why we’re doing it, and why you should consider investing. 

1)     How it works

What is an AngelList syndicate?  It is an opportunity for investors – those that already use AngelList and those who might be interested in doing so – to coinvest alongside VentureSouth members in our portfolio companies.

How does it work?  Once you register with the platform, you can see the investment opportunities that we make available and, if you like what you read, invest in the company. You can invest as little as $2,000 in our syndicate. AngelList’s guide to syndicates is here, and there are many other sources to learn about the pros and cons.

Will you share every deal on the platform?  No. Not every company we invest in is suitable for a syndicate. In many cases, the rounds are fully funded from our in-person angel groups and funds; in other cases, VentureSouth members comprise a small part of a round led by another group, so it isn’t appropriate for us to help “lead” the company in raising money; in others cases, we might invest in a bridge round or later stage financing that doesn’t fit on AngelList.

So which deals will you put on?  Investments we are leading or co-leading in companies raising true “angel rounds” where there is a small but meaningful gap in funding that remains after we have invested. This is likely to apply particularly in companies where there are few specialist investors in the Southeast – consumer-related companies, ecommerce apps, or green/sustainability companies, for example.

What does it cost? It costs nothing to “back” the syndicate and stay informed about the deals available. If you choose to invest in a particular opportunity (for which the minimum investment is $2,500), you will share in the fee that AngelList charges to set up its investment vehicle. (How much you pay depends on your share of the total amount invested through the investment vehicle.) VentureSouth charges no fee for this.

If the deal pays off, you get your capital back and this fee refunded; you then pay a “carry” of 20% on the profits of the deal to AngelList and/or VentureSouth.

Sounds interesting. How can we back the syndicate? Follow this link, do your diligence, and sign up. We look forward to working with you!

Back to basics: valuations - how do you work it out?

Now you know what a valuation is, how do you figure out what your valuation is?

The short answer to this question is simply “whatever someone will pay.” It sounds trite, but it’s true.

There are plenty of online resources describing the various methods for estimating your valuation; lots of places to get differing opinions on what the valuation “should be”; companies galore offering to (charge you to) help you “determine” your valuation; and places you can go (like a workshop) to learn about the strategies and techniques more.

All of these are nice, but fundamentally investors don’t care what other people (especially those with no skin in the game) think. For our money, all that matters to us is what we think this company is worth. That’s the right valuation.