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!