Play Ball


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! 


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.


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.

Job creation chart.jpg

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.

Back to basics: pre- vs. post- complications

Four, more complexity between “pre-money” and “post-money”

Imagine a company that has previously raised a $100,000 convertible note whose terms require it to convert into equity if the company raises $500,000 of equity capital. Now it raises $500,000 on a $2 million pre-money valuation. What is the post-money valuation?

Per the last post, one would imagine $2M pre-money + $500k of money = $2.5M post money valuation, with the new investors owning 20% of the company ($500k/$2.5M). Right? No.

When a deal is done, there is often more complexity than simply “new money”. In this case, the conversion of the convertible note into equity; other times, the creation of an option pool for future employees.

To account for these complications, we actually calculate as follows:

  • Pre-money valuation = current number of shares multiplied by proposed share price
  • Post-money valuation = post-transaction number of shares multiplied by proposed share price

Back to basics: pre- vs. post-money valuation

Third, the “pre-money” vs. “post-money” confusion

Angels speaking in terms of “pre-money valuations” can lead to some confusion. Entrepreneurs often think in terms of “share of the company sold” and the cost of that stake in the company. So, for example, they might say “we are selling 25% of the company for $500,000.”

Multiplying each side by four: 25% of the company => 100% of the company; $500,000=> $2 million. So my valuation is $2 million.

This math is right, but that is not the pre-money valuation. It’s the valuation of the company including the investment that has been made – because the shares are purchased and the money goes into the company. So once we’ve invested, the post-money valuation is $2 million in this scenario.

To get the pre-money valuation, we have to subtract “the money” – i.e. $500,000 from $2 million. In angel language, this is a deal with a $1.5 million (pre-money) valuation.

Got it? Good – because this mistake appears quite a lot.

Consider this TechCrunch article from early March: on Dragons’ Den (Shark Tank with posher accents) M14 industries negotiated “a deal £80,000 for 20 percent equity, giving the young startup a £400,000 pre-money valuation.” No it didn’t.

Or a pitch we recently saw from an otherwise compelling company: “raising $350k for 10% equity, a $3.5M pre-money valuation.” No it isn’t.


Back to basics: what is valuation?

Continuing our “back to basics” snippets (see here on basic deal types and here on the types of angel groups), we are going to have a few posts about the “economic” terms of angel investments.

First up, what is “valuation” all about?

Most people get the basic idea about buying stocks. Apple’s share price is $139. There are a lot of Apple shares, so that if you would buy them all at $139 per share the total cost would be $730 billion. That’s Apple’s market cap, its valuation.

Angel deals work the same way. We buy shares in a company. When we speak about “valuation,” we mean the share price multiplied by the number of shares, to give a total valuation.

So, for example, we might invest in a company at a $2 million valuation.  This means we buy shares at a price that means if we bought all the shares in a company it would cost us $2 million.

This doesn’t mean we’re investing $2 million, or that our shares are worth $2 million, or that the company is receiving $2 million.

Other myths

Here are a couple more misconceptions and myths.

I don’t have time to be an angel investor. False. Members of our group attend a 2-hour meeting 10 times a year. (Obviously many do more than that serving on diligence teams or reviewing their findings, being active mentors, advisers, or board members to portfolio companies , etc. – but none is required.) Investors in our funds like the VentureSouth Angel Fund II as entirely passive – no time commitment required.

This is just for men. False. Nationally, around 25% of angel investors are women. Some funds, like our coinvestment partner The Jump Fund, are women-led and focused on female entrepreneurs. Every VentureSouth group has a strong showing from female members, and all meetings are open to spouses. All are welcome.

What else have we missed?