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Upstate Carolina Angel Network Panel Discussion - January 8th

Originally published at The Greenville News

The Upstate Carolina Angel Network (UCAN) is off to a strong start, and that is a good sign for South Carolina startup companies.

Since UCAN launched its operations in April, the group has grown to include 75 members, reviewed more than 125 business summaries and heard presentations from 14 startup companies seeking early-stage funding. UCAN members have now invested more than $1.2 million in four startup companies from among those candidates.

When it was recently announced that two of those companies are located in North Carolina, it prompted questions as to whether UCAN is providing economic development benefits to the Upstate. The question is one well worth considering, so I would like to share a few thoughts about our group, its purpose and how its work will indeed support the economic development of the Upstate and South Carolina.

UCAN was organized, according to its charter, "for the purpose of leveraging the collective experience, expertise and relationships of its members to enhance the likelihood of success of investments in early-stage, privately held businesses that ... have high growth potential."

In the last decade, nearly 300 angel groups have emerged across the U.S. with similar objectives.

Along with the high growth potential of angel-funded startup companies come very high risks. Recent research sponsored by the Kauffman Foundation revealed that roughly half of all angel investments result in a substantial or complete loss to the investors. Less than 10 percent of angel deals become "home runs" that provide most of the returns -- and the winners usually take more than four years to pay off. Hence, angel investors must build a portfolio of the best available deals within their region in order to justify and diversify their substantial risk. UCAN will consider deals within about a four-hour drive of Greenville.

As UCAN members focus on finding attractive investment opportunities around the region, the group's activities will also provide important contributions to the economy of the Upstate. Let me highlight just a few ways UCAN will support the growth and success of South Carolina startup companies.

First, the existence of UCAN gives Upstate entrepreneurs a local "first-stop shop" for startup financing and business guidance that would otherwise be extremely inefficient to identify and solicit. Second, the better the returns on UCAN investments, regardless of the location of portfolio companies, the more capital our investors will have available to put to work in South Carolina startups when attractive opportunities arise. Third, by syndicating deals with other angel groups in our region, UCAN is building relationships with key partners who can bring additional capital to the table when local companies need angel funding.

Additionally, working with more experienced angel groups allows UCAN to learn best practices for operating a successful angel network and advising portfolio companies. That will enable our group to better assist local startups as they prepare to raise later, larger rounds of growth capital from venture capitalists and other institutional sources.

Finally, and perhaps most importantly, most UCAN members join the group not only to make money, but also because they want to lend their expertise and experience to help a new generation of entrepreneurs succeed in growing lasting businesses that will benefit the local economy for years to come.

To date, UCAN has worked with several Upstate companies to provide feedback on their business plans and investor pitches, including two companies now in consideration for investment. Additionally, of the $1.2 million that UCAN members have invested in companies that have presented to the group, nearly 70 percent went to two Upstate ventures -- Selah Technologies and HS Pharmaceuticals.

While UCAN must focus on finding attractive investments throughout our region, the group also is providing tangible benefits to South Carolina startups, and we would like nothing more than to see our most successful investments emerge from right here in our backyard. We are proud to be part of the growing Upstate entrepreneurial infrastructure being built by groups like the Chamber, NEXT, SC Launch!, InnoVenture, and Clemson's Renaissance Center and Spiro Institute. We look forward to working and winning together with these groups and the entrepreneurs they support.

We would like to tell you much more about UCAN, so please join us for a panel discussion about our group at the Greenville Chamber of Commerce at 4 p.m. Thursday, Jan. 8. You can find more information about the event and our group at www.upstateangels.org.