VentureSouth, the angel network investing in early stage startups in the region, ended 2016 with a bang. It invested more than $4 million in 15 Southern startups, a 15% increase over the prior year and a record for the firm, which was founded in 2008 as a single angel group in Greenville, South Carolina. Today, it boasts 11 angel groups representing more than 200 individual angel investors, making it one of the largest angel groups in the country. Its activity is concentrated in the Carolinas, but it also extends to Florida and Tennessee. To date, it has invested more than $20 million in 55 startups. Exits have put more than $1 million in returns back into the pockets of its investors.
Mac Lackey, a veteran entrepreneur and Startup Southerner contributor, joined VentureSouth in 2015 as a managing director. He believes the group’s model—which he calls fundamentally better than most—is helping to drive its growth.
“As a long-time Southeaster entrepreneur, I know the struggles I had to raise capital,” he says. “There has always been a gap in the market, however to be fair ‘investors’ didn’t really have a great platform to have deals vetted, put through diligence, terms negotiated and so forth. That was a missing piece of the angel puzzle, and VentureSouth has it. When I saw their model in action, I wanted it to expand, and I wanted my best angel investors/backers over the years to have access to this model. In the end I think it will lead to not only more companies getting funded, but more importantly a better educated and better structured group of sophisticated angel investors who are benefiting from this important asset class.”
Lackey also credits the strength of the region’s startup scene.
“VentureSouth’s model is maturing at a time when the Southeast is starting to really develop some exciting companies,” he says. “We are certainly seeing some maturation in the quality of new startups emerging from the South. This is happening as a result of the increasingly lower barrier of entry created by technology (i.e. the time and cost to create a company is dropping quickly) and a general improvement in the education and sophistication of entrepreneurs who are building companies. Now, starting a company in the Southeast can be seen as a strategic advantage where the cost of talent is lower, the cost of offices is lower and there are smart, seasoned investors and advisors who can help entrepreneurs build great companies.”
Lackey says VentureSouth is planning to expand its footprint to more markets in the South, “leveraging the model that has worked well in existing markets.”
“The more investors who join the network the more powerful the model will be, the more good companies get funded and the cycle will repeat,” he says. “This virtuous cycle is what we need here in the Southeast.”