The majority of angel investors... effect of carry

If you’ve been following along with the posts in this series (part 1, part 2, part 3, part 4, part 5, part 6, and everyone’s favorite part on taxes) it’s a safe bet you like angel investment data a bit too much – but are excited about the chance to dig ever deeper.

We’ve been discussing these analyses at our VentureSouth meetings this month, to both positive feedback and constructive criticism – so I’m adding this postscript to tackle one particular issue: carry.

The specific criticism is: to exclude fees and carried interest from the presentation about the data is misleading (to what degree, only the data would show). Of course to your credit you did mentioned it [in part 3]… but I would say to offer conclusions with assumptions about this unaccounted for cost is not nearly as useful. Particularly if your point is to pair the idea that angel investors aren't making money, which to me is clearly examining the issue from a bottom-line perspective.

This is a fair criticism, and so we offer below some additional discussion to address it.

First, some background. Private markets investment return information (like angels but also private equity and venture capital) is almost always presented as gross returns, at least at a headline level. This chart, popular recently on "VC twitter" and the benchmark angel returns data everyone, for example, show gross returns. This is because it’s simpler, and it’s impossible to compare across aggregates when every class and fund has different fee structures.

Now, this overstates net returns. However, as carried interest is charged as a percentage of a gain (and usually after accounting for relevant management or other fees), it cannot turn a positive result into a negative. In a VC fund, carry applies when the fund overall returns a positive result - it reduces gross gains a little, but cannot switch a >1x ROI to a <1x. (That isn't usually true of public market investing, where fees charged on “assets under management” still apply even in loss-making years. In that respect, VC/angel is better than public markets.)

Similarly, for individual angel investments, a >1x ROI deal cannot become a <1x ROI after carry, even on returns that are close to 1x. For example, in a group that charges a 10% carry, a gross 1.050x ROI investment becomes a net 1.045x ROI – still >1x.

However, in this specific analysis (of the incidence of aggregate losses), there’s a unique set of scenarios where carry could move someone from an aggregate "win" to a "loss": where 1 or 2 deals create big gains but other investments lose enough capital to exceed the net gain but not quite enough to exceed the gross gain. This seemed pretty unlikely to me before adding my caveat in the part 3 blog post. But it’s good to check assumptions, so does it actually make an impact?

We re-ran the analysis to include carry and it moved two investors from the "win" to the "lose" category. So 40 out of 389 (10.3%) became 42 (10.8%). Not zero, but I think fair to say pretty rare, and not (in my opinion) a material change. The earlier conclusion that only a small minority of angel investors lose money (through VentureSouth) still seems justified to me.

In fact, both those individuals had small portfolios (2 and 3 investments respectively), which reinforces the conclusion about the importance of diversification: 2-3 companies is a risky portfolio!

SC angel credit trading season

Last week’s post about the after-tax returns of angel investors was prompted partly by Malay and partly because it’s the time of year when people buy and sell 2018’s angel investor tax credits.

Our members and others want to buy these credits, so if you have some but can’t use them we would love to talk about it. Our intro guide, and the series of blog-posts from the archives (beginning here), particularly the FAQs for buyers and sellers, are popular this time of year.

If you have any for sale, please get in touch - we can help.

Angels' post-tax returns

Across our series of posts last month, we tried to slay the myth that most angels lose money. Most VentureSouth angels do not.

An avid reader and successful angel suggested we consider the post-tax returns (thanks Malay), so here we go.

First, taxes on successful investments reduce gains, of course. But they don’t turn gains into losses, so looking at the post-tax returns can’t increase our 10% proportion.

In fact, taxes likely reduce that proportion still further. Really Paul? 

Well, actually, yes. Angel investing enjoys many interesting tax benefits, as almost everyone recognizes the benefits of early stage companies getting funded. This isn’t a policy paper, though, so here are just two tax issues particularly relevant to failing angel investments: Section 1244 and the SC angel investor tax credit.

Before you click away, trust me this isn’t that boring and you’ve already nearly finished reading this post.

1)    Section 1244 loss: if you invest as part of the first million dollars in a company and lose money, you can deduct what lost as an ordinary income loss. This is amazing. Caveats apply and the detail is complicated; but the bottom line is that this is a remarkable silver lining in failed angel deals. The benefit is [the loss]*[marginal income tax rate] – which definitely reduces the loss (so that 0.6x ROI portfolio might have been more like 0.7x post-tax) and could even be enough to turn a small loss into a post-tax gain.

2)    SC angel tax credit: if you invest in some SC-based companies, you might get a 35% state income tax credit. Invest $10,000 in a qualified SC angel round; knock $3,500 off your state taxes in future years. Again, caveats and complexities apply – our guide covers a lot of them(and oddly you lose some of this benefit if you lose money on the investment!) – but this is another silver lining. As a credit against income, the reduction of the loss is even greater: you essentially (simplifying a bit) make a 0.35x ROI even if you lose all your investment. That could easily be enough to turn a loss into a post-tax gain.

And yes (1) and (2) stack! So, post-tax, in the right deals done correctly, even angels that lose money might make money.

The majority of angel investors...diversified funds

The previous posts in this series looked at investors that invested directly through VentureSouth. This included investments made through our VentureSouth Angel Funds. If the last posts were accurate, we would expect an automatically-diversified portfolio to lead to even fewer investors that have lost money overall.

And, based on our two fully-invested sidecar funds, those expectations would be correct. None of the investors in those funds have lost money, and none are (we think) on track to.

Fund I (2014/16 vintage) has already returned almost 50% of invested capital to members, from the realization of just the first three of its 18 investments. It has a book value approaching 2x ROI already (from exits and the residual portfolio value based only on later share sales, not marking-to-market the performance of its portfolio), and could be more if things continuing going well in the portfolio.

Fund II (2016/18 vintage) has had its first positive realization this year, a book value of 1.1x ROI already, and is on track for similar results – though it is still too early to estimate precisely what the return will be.

These fund investors (with no loss-makers yet) bring the average for VentureSouth down a little: those that are less diversified from their group investing have incidence of losses.

Of course, no-one knows what the future brings. If many of these companies fail over the coming months it is conceivable that these fund investors could ultimately lose money. But with companies like Proterra, KIYATEC, Baebies, Spiffy, Emergo, Emrgy, and others attracting national attention, VC funding, strategic partners, and acquisition interest we are optimistic.

The majority of angel investors... part 5

One other point to note in this series: “losing money” in angel investing does not necessarily mean losing all the capital you invested in startups.

Of the 10% of investors that lost / are losing money in VentureSouth-related investments, only a very few (less than 1% of investors) lost all their investment. In fact, the aggregate return for those investors is around 0.6x ROI – not great, of course, but far from a total loss. These unfortunate investors have, in total, in fact received back a majority of their invested capital!

An individual angel investment can easily result is a complete loss of capital: when startups fail, there is often no residual value for equity investors like angels, whose claims at a liquidation come after lots of others have received their claims. Angels should only invest money they can afford to lose.

But it’s very much less likely to hit a string of complete “zeros.” A few partial exits, dividends, or a successful investment along the way makes it quite hard to lose all your money. Diversification, again, is critical.

The majority of angel investors - why?

The last posts about the proportion of VentureSouth investors that have lost money in angel investing concluded that only a small minority (10%) of angels investing through our group have lost, or are on track to lose, money in aggregate.

That’s not a trivial number – we don’t want people losing money on investments made through VentureSouth – so we wanted to dig deeper to understand why those individuals received, or are facing, overall losses.

First, the obvious reasons:

  • startups fail all the time: the five-year survival rate of all new businesses, let alone technology startups in the Southeast, is under 50%.

  • 50%-70% of individual angel investments result in a loss of some capital, according to the most authoritative academic data; the same is true for VC deals.

  • and in any dataset there will be “unlucky” investors in the left hand tail of the distribution and some “lucky” ones in the right hand tail.

But let’s dig further: what did those “unlucky” investors have in common, and what can we learn from their misfortune or mistakes?

First, diversification. It’s a cliché – but it’s true – that diversification reduces risk. Of the investors that fall into the “loss” category, around 60% (of the 10%) invested in only one or two companies. It is not really surprising, therefore, that they lost money. Startups are risky and individual companies frequently fail.

On the other end of the spectrum, only one of the unsuccessful investors made over ten investments, and that individual is on track (according to our best estimate of likely outcomes) to have a positive return in the end.

So, if you’re diversified, you stand a much better chance of not losing money. If your angel investment plan is “one and done,” or you expect to generate 20%+ annual rates of return from a couple of angel investments (alone or through any group), you will be disappointed. VentureSouth’s biggest strength is the opportunity to develop a portfolio of well-curated investments quickly. We’ll come back to that, and how diversification affects returns overall, another time.

Second, timing. Some of the loss-making investors have realized losses but still have paper gains that might result in a positive return overall; if their portfolios mature as we think, they would move out of the population. Fingers crossed – and noses to the grindstone.

These individuals highlight the inescapable reality of angel investing: angel are “blessed” with early failures and (usually) long-term gains. If a deal is going to fail, it is likely to do so quickly, as its 12-18 months of runway from the angel round are exhausted; if it’s going to win, you might enjoy an “early exit” – a solid result quickly, which is a good rate of return – but it will likely take 3-5 years or longer for truly successful results. A 10x return in two years is a rare exception – but we have those in our portfolio, and others do too.

So, the VentureSouth data supports what we tell members and potential members: angel investing is risky, but if you’re diversified and patient your probability of success is much greater.

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.