GREENVILLE, S.C. – More than half of VentureSouth‘s deal flow originated in the Old North State in 2020.

The angel investment group, headquartered in Greenville, South Carolina, invested nearly $9.2 million in 26 early-stage companies last year — including $5.1 million in 14 companies from North Carolina, the most of any state.

Among the companies receiving follow-on investments: Kwipped in Wilmington, ProctorFree in Charlotte, Reveal Mobile, Get Spiffy, Altis Biosystems, Baebies, and UVision from Research Triangle.

New investments included  Live Furnish in Winston-Salem, an image production technology platform for the furnishings industry; Durham-based Seal the Seasons, a locally-sourced frozen fruits and vegetable company; and Soelect, a Greensboro-based startup that is working on commercially viable, low-cost solution for solid-state battery.

Despite pandemic, VentureSouth angels invest $9.2M in 26 startups including 14 from NC

South Carolina nabbed the second spot with eight companies and $2.5 million in investment.

WRAL TechWire’s Chantal Allam had the chance to speak with Matt Dunbar, VentureSouth’s co-founder ad managing director. Here’s what he had to say:

  • North Carolina represented half of VentureSouth’s deal flow in 2020. Unpack that for us.

North Carolina did represent just over half of our total investments last year in terms of both companies and dollars. A big part of that is a function of our continued growth in investors and member groups in North Carolina as we’ve expanded from our base in South Carolina over the last few years. That growth has allowed us to get more plugged in to the strong pipeline of companies emerging in various markets across the state.

We’re also growing in other markets, so we’ll expect relatively more activity outside of Carolinas as we continue to grow.

Source: VentureSouth

  • So what are you seeing out of North Carolina?

Like most early-stage investors, we’re looking for a compelling thesis that ties together a unique and defensible technological solution to a high-value problem with a talented team that can execute.

Again, as we grow in North Carolina, we continue to see more deal flow from the state. Obviously, the Triangle is one of the primary places in the Southeast where you find a density of technology and talent and experience, and a cluster of other startups that have been successful – not to mention the universities and larger tech companies in the ecosystem. We’re also seeing really interesting companies from other parts of the state, and we’ve made investments in Charlotte, Wilmington, Greensboro, Winston-Salem and Asheville.

  • Can you tell me which companies that you are particularly excited about in North Carolina?

One of the companies in our portfolio is Get Spiffy, a vehicle maintenance startup founded by Scot Wingo in Raleigh. [He’s] such an impressive entrepreneur. He’s been through these sort of macro crises before, so he can see around corners a little bit. He shared a company update with investors recently, and it was instructive hearing him recap his thought process as the pandemic set in and how they were able to get ahead of the curve with offering disinfecting services. They were also able to test out some other hypotheses for different business lines, and those tests helped solidify the case to launch a franchising model. We think a ton of Scot and his ability to navigate and to anticipate and to execute. You can see how he’s been so successful.

Another one I’ll mention is ProctorFree in Charlotte. They’re in the online test proctoring business. Their CEO Mike Murphy has shown a lot of grit and resilience in facing some tough challenges in the business even before COVID set in. And then all of a sudden the world goes all virtual, and they have this virtual test proctoring product which becomes a critical need on a large scale for educational providers. Because they had fought through some of the earlier challenges, they were well positioned to take advantage of this massive new opportunity when it came their way with the pandemic. It’s a fun story of watching an entrepreneur persevere and navigate challenges and come through the other side with a lot of momentum and excitement.

Those are just two examples, and we don’t have room to mention them all but we’re also really excited about a bunch of other North Carolina portfolio companies like Altis Biosystems, Baebies, Reveal Mobile and UVision just to name a few.

  • Talk me through the start of the pandemic, and how it affected deal flow.

Like a lot of early-stage investors, we essentially stopped looking at new opportunities in the second quarter of last year as we tried to triage the existing portfolio and figure out how to make sure those companies could survive. We spent a lot of time on the existing portfolio from March to June. Then in the back half of the year, we started looking at new opportunities again. I would say that it did take a little bit of time for the pipeline to catch back up after that intentional pause. But my sense is that we’re about back to normal in terms of the quantity and quality of the deal flow. There’s always an ebb and flow to the quality of what we’re seeing – and I don’t think that’s really predictable or necessarily correlated with anything on a macro level.

  • What does the deal flow look like right now?

As we expand our footprint, we’re taking in more deal flow from across the region at a higher clip. We certainly still see a lot of interesting activity out of North Carolina. But again, our aperture is widening so we’re seeing more deal flow from other places as well. We’re able to gain visibility to more opportunities than we have in the past because we’ve grown into new markets and we’re getting better networked into those sources of deal flow. But I certainly don’t see that as indicative of a slowdown in in deal flow from North Carolina.

  • What are the new emerging markets?

We’re not thesis driven around particular emerging markets so we’re not typically chasing a particular tech trend like AI or blockchain for example. We look at every deal on its own merits and on a case-by-case basis. And we can be mostly agnostic about industry because we can leverage our network of over 300 members to help us evaluate deals from any sector – but not surprisingly the kinds of opportunities we invest in tend to cluster in the usual industries like tech/software, life sciences and some capital efficient industrial applications around instrumentation, analytics and energy efficiency.

As is always the case, anytime there’s a new technology emerging, we’ll start to see companies that are working on that technology and trying to advance it, so we’ll certainly dive in and look at those opportunities. But again, for us, we’re not trying to predict which sectors will be hot and pursue those areas specifically. We continue to find compelling opportunities across a wide swath of sectors, even as new trends and technologies emerge.

  • What about regions?

We continue to be focused on the Southeast – but over a wider footprint. We just launched a new group in Richmond, Virginia, in partnership with Startup Virginia, so we’re seeing some interesting deal flow out of that area. We’re also spending more time trying to mine opportunities in the Atlanta area. We’ve always had a connection to Atlanta but it’s just such a big market that we’ve been a little bit capacity limited in the past to spend a ton of time there. But now that we can do that virtually, are working to understand the opportunities in that market better, as Atlanta is obviously a major driver of deal flow in the region.

We’re also seeing more activity out of Northern Florida, too. And of course we continue to see a steady flow of deals here in South Carolina, primarily from Greenville and Charleston.

  • Looking ahead, what’s next?

In terms of the way we conduct our normal business processes, we’ll look forward to getting back together in person with our investors once it’s safe to do. But in the meantime, we’ve been able to leverage tools like Zoom and the like to keep connected and run our processes without much of a hitch in terms of how we execute on evaluating opportunities and making investments.