If you think there’s no capital in this region, then you should have attended yesterday’s Entrepreneurs’ Series, where 10 national, regional and local investors made it pretty clear they’re looking for deals in the Triangle.
Bull City Venture Partners hosts the series several times a year, and about 150 people showed up at Brier Creek Country Club to hear a fireside chat between ChannelAdvisor CEO and co-founder Scot Wingo and Andreessen Horowitz managing partner Scott Kupor, a panel of regional venture capitalists hosted by Bull City’s David Jones and a panel of angel investors probed by ReverbNation co-founder (and an angel investor himself) Jed Carlson.
Some of the talk was expected—they discussed local deal flow, the amounts they invest, how they source deals, an outlook on the region. Other comments were enlightening and worth repeating.
So here’s my best attempt at summing up three hours of discussion and insights from some of the most active investors in this region:
1. A big gap in startup communities outside Silicon Valley is the connection between universities and the commercial market. Kupor sees much potential yet to be tapped if entrepreneurs engage more with the university and research community.
2: Location still matters at the early stage. Young startups need their investors to be advisors embedded in the operation of their companies. That’s why Andreessen Horowitz focuses its early stage investments in Silicon Valley. Only after a company has a product, customers and traction will Andreessen consider a deal outside the region.
3: Though the shutdown of Silk Road has given Bitcoin a bit of a bad name, companies like Overstock.com, which has agreed to accept the currency, are helping to prove its true potential to investors like Andreessen Horowitz. Kupor says the true value in Bitcoin will be the savings and security it offers to ecommerce companies and their customers.
4. On WhatsApp, Washington D.C.-based Grotech Ventures investor Don Rainey says Facebook’s acquisition was smart defensively, to keep the audience of young mobile users, and offensively because it had low acquisition price per user of $42 (on 450 million users worldwide) and gave Facebook footing around the globe.
5. Raleigh angel investor David Gardner advises companies not to raise money from friends and family. It’s too easy. A ‘No’ and feedback from sophisticated investors is often more beneficial for a startup than easy money, he says.
6. Wright Steenrod of Chrysalis Ventures gave some insight into his Louisville-based firm’s investment in Digitalsmiths, just acquired by TiVo for $135 million. The introduction came through Hutchinson Law Group (lawyers are a typical way he sources deals) and the company fit into Chrysalis’s focus on media and transforming industries (with its way of assembling metadata around video). Co-founder Ben Weinberger was compelling in person and was able to close deals with the largest cable and paid-TV companies in North America.
7. The most interesting themes for 2014 investments (as per these 10 investors) include healthcare IT that makes the industry more efficient and takes into account the provisions of the Affordable Care Act; cognitive science and educational technology tackling assessments; enterprise software that’s cheaper and better than Cisco, SAP, Oracle and the mainstays; big data that is trusted by the consumer; Internet of things and hardware; and all things security.
8. The angel investor panel made it clear that investors are all different and should be selected carefully and strategically. They’re interested in different sectors and stages. Some want more control; others less. Some want to co-invest; others want to go it alone. Some want a proven product; others want to help build it from the ground up. Some want a marketer or salesperson founder; others want a highly technical leader or a multi-disciplinary duo.
9. Relationships are more important than the pitch. David Gardner likes a bad pitch—it shows all the ways he can help a company. Tim Huntley declines pitches altogether. He wants to sit down with entrepreneurs face-to-face and get to know them first. Dave Neal of the Startup Factory opens his office eight hours a month to any founder. Startups can sign up for time to meet and chat.
10: ChannelAdvisor’s IPO has apparently afforded Scot Wingo a new Tesla, and its frequent updates provides the perfect example of the Andreessen Horowitz view that “Software is eating the world.”