According to Brown, two or three new investors join the group each month, and the organization now has more than 70 investors—at least half of the active angel investors in Charlotte, Brown estimates. Each member has invested $25,000–$100,000 in the Charlotte Angel Fund—which totals $3,044,000 in capital.
“The fund has a great platform that enables people to make angel investments and also choose their own level of engagement in those investments,” said Maria Mascia, a Charlotte Angel Fund investor and managing director of Salem Lake Capital.
The angel process
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Three companies are invited to present at each monthly membership meeting;
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After the presentations, members decide whether there is enough interest to warrant due diligence; if there is interest, a volunteer group of four or five members begins that process;
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That volunteer group makes a recommendation to the full membership group as to whether the organization ought to invest in a company or pass;
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Investments require at least 2/3rd approval by members to proceed.
The due diligence process is a critical step in ensuring that fund members are confident in the investments the organization makes. Typically, at least one person on the volunteer group conducting the due diligence process will have a background in a startup or in the industry the company is targeting, said Mascia.
“All of the people I have worked with in the due diligence committees,” said Mascia, “put a lot of effort into gathering all the data necessary to make the best investment decisions for the fund.”
The fund’s most recent investments in the tech-enabled dog-walking The Waggle Company in Charlotte and Myxx, an omni-channel marketing platform for brands and grocery stores.
“Our typical investment is $100,000–$200,000 in an investment round of $500,000–$2,000,000,” said Brown. “We have no geographic or industry restrictions on our investments.” Even so, 12 of the organization’s 14 portfolio companies are based in North Carolina—only two,Ecomdash and The Waggle Company, are based in Charlotte.
If individual investors wish to invest more money into a portfolio company or to join a deal as an individual, they are invited to do so at their own discretion, said Brown. Companies are typically technology-driven organizations with the potential for a 10x return on investment, said Brown.
Growing Charlotte’s Early-Stage Investing Community
The fund has grown under Brown’s careful administration—interest in angel investing is increasing in Charlotte, said Brown, and a part of enhancing the ecosystem is ensuring that first-time investors have a good first experience.
“If an individual’s first toe in the water is putting money into something like their neighbor’s pool cleaning business, their outcome will be unsatisfactory and they are unlikely to try it again,” said Brown. “Charlotte Angel Fund gives members a structured approach to deal flow and an education as to how to evaluate and structure investments.”
Charlotte’s entrepreneurial economy still has some challenges, said Brown. Technical talent is still sparse, though growing. There are large corporate entities in Charlotte that are perceived as anything but entrepreneurial. There’s very little corporate or academic research and development compared to other similarly-sized cities. These are all factors, said Brown, but the most interesting challenge Charlotte faces might be the relationship with capital.
“Charlotte is over-supplied with capital, but that capital is generally unwilling to deploy early-stage,” said Brown. “The reason is entirely logical. People are most comfortable investing in a manner that resembles how they have made money in the past.”
In Charlotte, that means investments tend to concentrate is more conservative markets—financial services, real estate, textiles—not necessarily technology companies or the activities that Charlotte’s entrepreneurs are pursuing.
“That said, I’m very bullish on Charlotte and its entrepreneurial scene,” said Brown. “The entrepreneurial ecosystem is advancing at faster-than-evolutionary-pace.” The Queen City is attractive to the dozens of people that move to Charlotte every day, primarily due to quality of life considerations and other lifestyle factors.
Charlotte: A Success Story?
“We in Charlotte undersell ourselves,” said Brown, considering the recent successes of some of Charlotte’s entrepreneurial companies: AvidXchange, Red Ventures, Yap (sold to Amazon), SmartSky Networks (raised more than $100 million), Sunlight Financial (raised more than $100 million), Passport (raised more than $50 million), MapAnything (raised more than $40 million), Payzer (raised more than $10 million), and Stratifyd (raised more than $10 million).
Think of Charlotte’s entrepreneurial ecosystem in a traditional child development model, says Brown. When young, babies expend a significant amount of energy, but it is dispersed in an entirely uncoordinated way. It’s hard for young, developing infants to accomplish anything—and it’s challenging for young entrepreneurial communities to use the positive energy in a focused manner to achieve instant results. Eventually, both babies and young communities learn how to harness that energy and coordinate their efforts.
“Charlotte is moving out of the uncoordinated expenditure of energy phase and into the coordination phase,” said Brown. “We are seeing significant change in this area.”
Brown hopes that Charlotte Angel Fund will continue to play an important role in the growing entrepreneurial economy in the region. He wants the organization to stay focused on exposing accredited investors in Charlotte to angel investing opportunities, as a premiere organization that startup founders can approach for funding, and helping both groups better understand the norms of the early-stage investing process.
