News & Insights

Inside VentureSouth's Southeastern Angel Investing MilestoneEarlier this month, VentureSouth announced that we had crossed a threshold: more than $100 million invested by its angel investor members into early-stage companies in the Southeastern US. Reaching nine figures is an achievement worth celebrating, not because it's particularly large, but because of what it represents: thousands of individual investors, working together, deciding (repeatedly) to bet on entrepreneurs building something new in a part of the country that venture capital often overlooks.Here's the story behind the milestone, how VentureSouth got here, and why we believe it matters for the region's startup economy.From a Greenville Meetup to a Regional PowerhouseVentureSouth was hatched in 2008, when a group of Greenville, South Carolina investors founded the Upstate Carolina Angel Network (UCAN). At the time, early-stage capital in the Upstate was scarce, despite the efforts of several trailblazers, so promising companies with ideas and traction had few places to raise the money to grow. UCAN set out to pool angel capital and run a disciplined process to find and fund the region's best startups.After first melting down the global economy in the GFC, the model turned out to work! By 2014, CB Insights had ranked UCAN among the top 10 angel networks in the country. Seeing an opportunity to do more, UCAN jedi Matt Dunbar joined forces with paduans Charlie Banks and Paul Clark to expand statewide, and then regionally, evolving these plans into “VentureSouth,” expanding beyond the Upstate into Columbia and Charleston, beyond South Carolina into Asheville, and then onward further across the southeast.Over the following decade, VentureSouth built out angel investing groups in communities small and large – from Anderson, Aiken and Atlanta to Charleston, Charlotte and Chattanooga – and across six southeastern states. Not every chapter survived; not every experiment worked. But operating as “one big angel group,” VentureSouth brought a consistent, professionally-managed angel investing infrastructure to markets that previously had little organized early-stage capital.Hitting $100MThis summer, VentureSouth members hit a milestone of passing $100 million invested into startups.That isn’t much in the world of grand finance. Economic development programs often allocate 10x that amount to luring a big corporate headquarters. AI companies burn that amount in an afternoon. The largest venture capital firms amass 10x that for a first closing for a later-stage fund.But in the world of angel investing, it’s a big chunk of change. Only around 10 angel groups in the country beat us to the milestone; only one got there faster, and none are based in a town the size of Greenville, SC.Today, VentureSouth has over 500 members across the Carolinas and neighboring states in its network, making it one of the largest and most active angel investing organizations in North America. The Angel Capital Association has repeatedly recognized VentureSouth as a Top 10 most prolific angel group in North America, including in the most recent 2026 ACA Angel Funders Report.The Deal that Did ItIn typical VentureSouth style, the investment that pushed the tally over the $100M mark wasn't a publicized new deal, or one where we are riding the coattails of a big VC. Instead, it was a small add-on investment in an existing portfolio company, HealthyCell, a Charleston-based microgel nutrient company whose products, hopefully, you consume! This investment reflects several VentureSouth hallmarks. An investment in the southeast. An investment in a company doing something interesting, novel, and “good.” A follow-on round, a reminder that much of VentureSouth’s work is about supporting companies over time, not just writing a first check and moving on. An investment that aggregated “a little bit more” investment from members new to VentureSouth.Unlike many venture funds, or even angel groups that specialize narrowly, VentureSouth has always taken an industry-agnostic approach, reflecting the varied backgrounds of its investor members — entrepreneurs, executives, academics, attorneys, and accountants — to evaluate opportunities across sectors. That shows clearly in this year's cohort of new portfolio companies, which include Alita Health (Charleston, SC), Beam Dynamics (Winston-Salem, NC), Connexus (Pawleys Island, SC), SalivIQ (Richmond, VA) and StratusGrid (Chattanooga, TN).We cover software, health tech, and life sciences, a variety of industries, with the common denominator of geography, stage, and entrepreneurs we want to work with.Built for the Long HaulPart of what makes the $100 million milestone notable is the environment in which it was built. Angel and venture funding nationally pulled back since 2021, and VentureSouth felt some of that slowdown too. But our strategy was to keep showing up — continuing to fund new companies and support existing ones through follow-on rounds — rather than retreat. That consistency, sustained across multiple economic cycles since 2008, is arguably as important to the milestone as the dollar figure itself.Built in Small ChunksMaybe more mind-blowing is how the $100 million is derived. VentureSouth isn’t a venture capital fund deploying money in $10 million chunks. Instead, the funds are spread over 135 companies, averaging less than $1M per company; in fact, at a median investment per company of $379,450!  And spread over multiple rounds of investment; 342 different investment rounds. That’s an average of $292,753 per deal, and a median of $192,500 deal size.Even more mindblowing: VentureSouth’s capital doesn’t come from institutional investors or a small number of ultra-high-net-worth individuals that regularly invest in million-dollars bites. They come in small check amounts. In fact, 5,752 different investment contributions from members, at a median investment check size of $10,000. 1,798 of those checks were for $5,000 – the smallest amount we can administer. Getting to $100 million via $5,000-10,000 increments takes a long time and requires a lot of commitment from a lot of people. But it is hard to think of a method for investing in startups that’s more fun.What's Next – Vicinity VenturesAs VentureSouth Co-Founder and Managing Director Charlie Banks put it, reaching $100 million is a moment to look forward:“Crossing the $100 million mark isn't the finish line: it’s the beginning of our next chapter,” said Charlie Banks, Managing Director of VentureSouth. “The Southeast is producing exceptional entrepreneurs at a pace we've never seen before, and the quality of companies being built here continues to rise. Our mission is to ensure founders don't have to leave this region to access world-class capital, mentorship, and investor networks. If the first $100 million established VentureSouth as a leader in angel investing, our focus now is on helping build the next generation of iconic companies that call the Southeast home.”Ten years ago, VentureSouth was an entrepreneurial experiment in whether angel investing could be done consistently and well outside the traditional coastal hubs. A hundred million dollars and 100+ companies later, the answer seems clear.But we weren’t satisfied with “just” angel investing. In 2025, VentureSouth took its evolution a step further, combining with Vicinity Capital – another entrepreneurial experiment in Greenville, this one focused on Regulation Crowdfunding – to form Vicinity Ventures. Vicinity Ventures’ goal is to be the premier platform for local alternative investing in the southeast. This pairs VentureSouth’s curated, accredited-investor angel deals with Vicinity Capital’s Regulation Crowdfunding work on companies raising from their “local communities.” The platform combines local investment opportunities for a broader base of investors. Our goal for the next chapter is not just to keep funding great Southeastern startups, but to build the infrastructure that makes local alternative investing more accessible across the region. To learn more about VentureSouth or explore investment opportunities across the Southeast, visit Vicinity Ventures at www.vicinityventures.co/venturesouth.

In 2008, a group of business leaders in Greenville, SC founded the Upstate Carolina Angel Network (UCAN) with a simple vision: give promising entrepreneurs across the Southeast access to the early-stage capital and experienced investors they needed to build great companies. Matt Dunbar was hired to lead that effort.Several years later, Charlie Banks and Paul Clark joined Dunbar to expand the network beyond the Upstate, transforming UCAN into VentureSouth, a regional early-stage investment network serving entrepreneurs and accredited investors across the Southeast. That vision has now reached a major milestone: this summer, VentureSouth surpassed $100 million in total investments across 135 startups throughout the region that have created significant new technologies, hundreds of jobs, and significant investor returns.Now with more than 500 accredited investors across the Carolinas and nearby states, VentureSouth is consistently recognized as one of the nation's leading angel investment organizations. In the 2026 Angel Funders Report released in July by the Angel Capital Association, the group once again earned Top 10 status among the most active angel groups in North America, a reflection of its sustained commitment to entrepreneurs and innovation.While the investment milestone and Top 10 ranking are significant for an angel investing group, VentureSouth's founders measure impact not just by the dollars invested and returns achieved, but also by the companies built, the entrepreneurs backed, and the innovation ecosystem strengthened throughout the Southeast.“One hundred million dollars invested is a notable milestone worth celebrating, but what matters more is what that capital represents,” said Matt Dunbar, Managing Director of VentureSouth. “Behind every one of those dollars is an investor willing to make a risky bet on an unproven venture led by a visionary entrepreneur working against long odds to solve hard problems and create new value in the world. That is a remarkable and noble quest that forms the underlying engine of the American economy, and we are proud to play a small part in that process. We are incredibly grateful to all the investors, founders, partners, and employees who have contributed to that work, and we look forward to seeing the continued impact these companies will have in the region and beyond.”Over the past 18 years, VentureSouth has invested across software, healthcare, life sciences, advanced manufacturing, financial technology, consumer products, artificial intelligence, and other high-growth sectors. Portfolio companies have raised more than $1.5 billion in follow-on capital, created more than 1,000 jobs, and generated significant investor returns across more than 30 successful exits - proof of the long-term impact organized angel investing can have on entrepreneurs, communities, and regional economies.For many founders, VentureSouth has become much more than a source of capital.“VentureSouth believed in me when FarmShots was little more than an idea,” said Josh Miller, founder of FarmShots and founder & CEO of Gradient Health. “That early support gave us far more than funding. It connected us with experienced entrepreneurs and investors who challenged our thinking, opened doors, and helped us build a successful company. Years later, as we're building Gradient Health, those relationships still matter. That's what makes VentureSouth unique- it invests in founders, not just companies.”That collaborative approach- disciplined investment processes paired with active mentorship from experienced entrepreneurs, executives, and investors—is central to VentureSouth's model.“Great companies rarely succeed on capital alone,” said Paul Clark, Managing Director of VentureSouth. “The best outcomes happen when experienced investors roll up their sleeves and help founders navigate the challenges of building a business. That's always been at the heart of VentureSouth. We've built a community where successful entrepreneurs and executives share their experience alongside their capital, and that combination has created tremendous value for both founders and investors.”By the Numbers$100+ million invested135 portfolio companies350+ investment rounds500+ accredited investors33 successful company exits, and counting$1.5 billion in follow-on capital raised by portfolio companiesOver 1,000 jobs createdTop 10 Angel Capital Association ranking over the last decadeLooking ahead, VentureSouth sees even greater opportunity as the Southeast continues to emerge as one of the country's fastest-growing innovation hubs.“Crossing the $100 million mark isn't the finish line - it's the beginning of our next chapter,” said Charlie Banks, Managing Director of VentureSouth. “The Southeast is producing exceptional entrepreneurs at a pace we've never seen before, and the quality of companies being built here continues to rise. Our mission is to ensure founders don't have to leave this region to access world-class capital, mentorship, and investor networks. If the first $100 million established VentureSouth as a leader in angel investing, our focus now is on helping build the next generation of iconic companies that call the Southeast home.”

Podcast introductions to VentureSouth portfolio companies and their ambitions to change the world for the better.

Angel Investing 101: How a Deal Goes from Pitch to Portfolio at VentureSouthHave you ever wondered what happens after a founder sends VentureSouth an email, or what it actually takes for a “pitch” to become a “portfolio company”? This post is for you. Investment processes often look like a black box from the outside. While there usually isn’t anything mysterious about it, it can be hard to really grok a how a disciplined, multi-stage evaluation process – particularly works in practice. It can be harder still to grasp the nuances of different investors’ processes. We do publicly disclose our process here. But, still, we get a lot of questions about how things really work, so this post aims to add a bit more detail and color.Step One: The Initial ConversationEverything starts with a conversation. As much as we would like to say “cold emails work,” it is rare for even an excellent cold email to get start a meaningful conversation. The unfortunate reality is there are just too many companies seeking capital, and too little time to do them justice, to dedicate meaningful time to cold email approaches. Especially in the world of infinite AI-generated email outreach.We therefore confess that VentureSouth prefers a warm introduction from a mutual connection who can vouch for the founder and the company. We prioritize companies that come to us from VentureSouth members, existing portfolio company teams, or ecosystem partners we respect.But a warm intro is not enough. Founders who craft a sharp, professional introduction are already demonstrating two things VentureSouth specifically looks for: preparation and resourcefulness. The criteria are clear from the start: VentureSouth invests in companies based in the Southeast, led by talented and trustworthy teams, generating initial revenue, targeting a preferred equity stake at a realistic valuation, and we don’t sign NDAs. If a founder hasn't done that homework before reaching out, we have our strongest negative signal and can move on to the next opportunity.Step Two: The Screening MeetingCompanies that make it through an initial conversation with one of the VentureSouth team are invited to pitch at a monthly screening meeting. That’s a 30-minute online presentation and Q&A, recorded so that the full VentureSouth membership can watch, review, and opine.This is one of our deliberate features of the VentureSouth model. Rather than a single VC Partner (or, more likely Associate) making a quick judgment in a conference room, dozens of experienced investors — operators, executives, entrepreneurs — evaluate the companies we screen. That room of collective experience highlights things that any individual might miss, and “averages out” ill-informed or gut opinions into a considered consensus. Groupthink is a risk, but a wide membership with diverse industry backgrounds protects against that.And if you can convince 25 VentureSouth members that you’re the most interesting company with the most believable plan today, you likely have a compelling investment opportunity.Step Three: Due DiligenceNext, a dedicated team of VentureSouth staff, led by our diligence leader Jewel, who has been doing this a while!, and investors dig in.We start by reviewing your documents, so companies with an organized, accessible, and complete “dataroom” distinguish themselves. Investors care (or, at least, should do) that you are correctly incorporated, have files your tax returns, have your business license, have had your employees sign IP assignment and confidentiality agreements, and all the other minutiae of being a real company. Losing here is an unforced error!The diligence team also review the plans – operating plans, financial projections, hiring goals, future fundraising plans, and exit goals – to see if we believe the path the management team sees seems achievable. This “validation” process also includes making reference calls and having a good think about whether this is believable.This stage is where some deals either earn real conviction or raise questions that can't be answered. VentureSouth only invests in roughly 2% of companies that started the process, but we invest in >50% of companies that get to this point. We are already mostly convinced; but we need rigorous diligence to make sure we don’t make our own unforced error. This process is also something that angel investors operating solo often don't have the bandwidth to conduct at this depth on every deal they consider. Our group model changes that equation by spreading the work across experienced volunteers, while maintaining consistent standards under Jewel’s supervision.Step Four: The RoadshowWhile we are working on diligence, companies that clear diligence are invited to present at VentureSouth's monthly member meetings. Some are virtual, but most are in-person in at least some of the cities we meet in regularly. Admittedly, this roadshow is a little inconvenient for founders. But it’s a crucial diligence element for us, because (a) we want to see how effective the team are and (b) VentureSouth ultimately needs its members to make investments in companies. Most people only invest in people they have met.It's also a final test for the founders. Honest, concise answers build credibility. Evasive or promotional answers tend to have the opposite effect in a room full of people who have seen a lot of pitches.Step Five: The InvestmentIf the diligence team presents its findings and enough members opt to invest, VentureSouth makes a capital call, collects checks, finalizes transaction documents, and closes the round. This can be easy – if we’re coming in at the tail-end of the round and all the work has been done. Or it can be 3-4 weeks of work, if we’re leading a deal and our attorneys need to create transaction documents and oversee some “corporate housekeeping”. Either way, hopefully without too much further delay, the company receives capital and gets on with building.We’ll cover what happens after investment in a later post.Why the Process MattersSolo angel investors often make decisions quickly, with limited information, and without a sounding board. The VentureSouth process is the opposite: it's “considered” by design, collaborative at every stage, and built around the idea that better information and more perspectives lead to better decisions.Some might argue it’s “too slow.” We hear that. On the other hand, in markets that are not built around “hype cycles” or have deep history of early stage investing, investors simply do not move very quickly. VC rounds take at best three months, and more likely six to nine or twelve months to close. Of course, a considered process is not a guarantee of returns; no process is. But over more than 300 investment rounds, it's the foundation on which VentureSouth's track record has been built. For investors considering membership, and founders considering a pitch, understanding the process is the first step.Interested in becoming a VentureSouth member? Learn more about membership here. Ready to pitch? Review our full investment criteria and reach out.

VentureSouth Summit 2026 recapThe 10th Annual VentureSouth Summit, February 2026, is now in the books!Over two days last week, over 200 people – VentureSouth members, portfolio companies, team, a few lucky guests, and two lucky strangers who stole our beer -- enjoyed the full range of VentureSouth content. Here’s what we got up to.Day 1 – Portfolio reviewKicking off at Greenville’s premier coworking space, Flywheel Coworking, a standing-room-only crowd took a tour of ten of VentureSouth’s portfolio companies.These companies had previously raised early-stage investment from VentureSouth’s angel investing members and funds (and others), and kindly dropped by to share updates on 2025 performance, their plans for 2026, their views on exit strategies and timetables, and their “asks” for investors. For several, the ask was “please invest again”! Open rounds tally: +9Day 1 – PartyAngel investing is a contact sport best done in teams and with friends. As VentureSouth covers a southeastern footprint, our members in Chattanooga don’t regularly meet our members in Charleston, or members from Greenville…our members in Greensboro, and so on.Our “kick off” party at Ink & Ivy in Greenville was therefore aimed at giving members the chance to put faces to names (or real faces to zoom square faces, at least) and trade feedback, experiences, connections, and support with each other and with the pitching companies.And we were all in bed by 10 😊!Day 2 – The State of VentureSouthOver to downtown Greenville, to the ONE Building conference space courtesy of Roam.A guiding principle at VentureSouth is that we always want our members to know what is going on, and why. This covers educational events, portfolio updates, deal term discussions, transparent diligence work, and much more – and to start the Summit Day 2 (after breakfast and coffee, of course) it covered providing our annual “State of VentureSouth” recap. Wins celebrated, losses commiserated, portfolio performance analyzed, and more lessons learned from Matt D’s annual update. 2025 was a good year for VentureSouth; more capital returned to investors than deployed typically makes a good year, at least for some members…With continued improvements to our cadence, reporting technology, and team coverage we think 2026 could be even better.Day 2 – Practical Learnings about ExitsAngel investing is philanthropy until there are exits. In two panels we learned lessons from one (painfully) unsuccessful investment and two positive exits, Cadchat’s sale to GoEngineer and Zipit’s purchase by Wireless Logic. When, why and how to engage with bankers, how board members can lighten the load and focus the discussion, how creditors can become enemies and how debt can become deadly, and how to manage shorter-than-expected or longer-than-hoped investment horizons; all things to consider when planning for and executing entrepreneurial exits.Day 3 – Sports InvestingThough not a deliberate theme, our lunch speakers provided differing-but-overlapping experiences of sports investing. Wallace Cheves, Greenville businessman and Chairman of Greenville Pro Soccer, outlined his experience – and introduced his current public fundraising, which you can learn more about – and, if you’re interested, indicate that interest to invest right here. Open rounds tally: +1Day 3 – VentureSouth MeetingTo wrap things up, our annual “Member Migration” meeting – a VentureSouth meeting where our members “migrate” to access the content – filled the final afternoon. Content included:a new company pitch (Open rounds tally: +1)two “refresher” pitches from companies emerging from our diligence process and closing up open rounds (Open rounds tally: +2)three further “open rounds” of portfolio companies that hadn’t pitched yesterday (Open rounds tally: +3)two companies currently raising capital on the Vicinity platform (Open rounds tally: +2)a lightning round of deals “coming soon” to the Vicinity platform (Open rounds tally: +6)and a disturbing amount of step-climbing cardio to distribute the microphones for the poor host.And of course there was swag, donuts, bourbon, boats, tough questions, last-minute agenda shuffles, the world’s most supportive mattress, Healthycell sample sachets, and all the fun joys of executing a 200-person 2-day conference!That was the agenda. What were the highlights?For Jewel: After months of working closely with our angels and founders through the diligence process, the Summit feels like a true full-circle moment! The conversations that start in data rooms and diligence calls come to life in person, and it’s energizing to see how much progress companies have made since we first evaluated them! For Charlie: Once again, we were proud to deliver maple bacon donuts to the membership! And for Matt: It's hard to believe we've been hosting these annual summits for a decade, but sensing the energy, excitement and learning that comes from gathering our investors and founders never gets old. We're always impressed and invigorated by the work our companies are doing to solve big problems and create new opportunities - from medical breakthroughs to AI applications - but this year was the first time we had an electric boat parked in a downtown plaza, so that was a new one for the highlight reel!If you came along, we would love to hear your highlights – and learn what we can do better so that the next 10 summits keep improving!What now?For those keeping count, there were 23 potential investment rounds (14 VentureSouth private deals and 9 Vicinity public deals) for consideration by members. If your complaint about angel investing is there aren’t enough deals to consider, we may know a group for you.(If your complaint is there are too many to evaluate, we hear you; luckily there are plenty of supporting materials to review, and other methods like an index-fund approach to simplify selection.)Having debriefed and decompressed, work resumes on our 2026 mission to do more to Make Money. Have Fun. Do Good.We hope you will join us for the next year, and that you will join us at the 11th VentureSouth Summit in 2027 as part of your membership.

2025 was a busy year for VentureSouth members, funds, and team. Paul’s episode of Venture in the South with David released in January captures some of the highlights, but here’s a fuller outline of what we got up to last year.Invested: $8.4M in 33 companies - 8 new companies joined the portfolio, and 23 existing companies (via 25 rounds) saw additional capital invested in their continuing journeys. 32% of capital invested into new companies, a little below our historical norms but in line with the market’s continuing focus on portfolio company support.Roughly 100 members wrote one or more investment checks during the year (plus the, partly overlapping, 50 investors in the VentureSouth Angel Fund VI that made its final investments this year).Proceeds: Final tally of proceeds of $8.7M from 9 realized gains and losses, from exits including Proaxion, Zipit, and several others that aren’t publicly disclosed yet. Returns > deployment makes a good year at VentureSouth!Of the realizations, we had 6 companies creating realized gains (over 13 investment rounds), 3 creating realized losses (8 rounds; which ranged from 20c to 85c recovered), and 1 company (1 round) repaying a note. Overall a “win rate” significantly above the 50/50 benchmarksSimilar to our November recap, December saw an exciting “early exit” when one of our companies partially exited through a growth recap – festively, the day before Christmas. We sent another >$1M of distributions to VentureSouth members and sidecar fund VI investors - the first exit from fund VI, and enough to make it a top 1% VC fund based on DPI! Again no Techcrunch feature, but another very solid “southeastern” deal at 5x on sold stock in 18 months.Ups, downs, and dodges: 3 up-rounds secured, technically zero down-rounds endured (although a couple of arguable recaps and mergers), and 12 portfolio companies that raised capital without pricing equity.Strategy: Our combination into Vicinity Ventures, which lets us cover the full range of Reg D and RegCF fundraising, expanded our team, systems, improved variety of deal flow opportunities for members, and helped local companies access different financing options from a wider investor group.Staffing: we welcomed Jewel Walker to the team, wished Alex well for his contributions to VentureSouth, and became increasingly concerned about how long we’ve been doing this for!What’s next: for a full rundown of 2025 results, you really need to attend Matt’s annual “State of VentureSouth” address at the 10th Annual VentureSouth Summit. To do that, you have to be a member of VentureSouth - which you can do via this link.

11 down, 1 to go!  It might be a shorter month, but no less activity kept us busy in November. Here’s what an angel investment group gets up to when left unsupervised.Meetings:November’s calendar was anchored by our last “Seasonal Summit” of 2025, in Charlotte, NC. We welcomed over 50 VentureSouth members and guests, mostly from Charlotte but with intrepid attendees from Greenville and the Triangle, for an afternoon of angel investing.We also met virtually, and in-person in Greensboro, Durham, and Chattanooga to make sure our members got to see entrepreneurs in real life.Thanks to six companies who pitched across those sessions, and to the four portfolio companies who updated us on their progress while we were in Charlotte.Investments:November was on a regular pace (given the lost week), with VentureSouth’s angel investors and funds investing $692,500 this month.We had some concentration risk this month: most of those funds went into the one new company that joined the VentureSouth portfolio. As is often true, we can’t publicly identify the company because the round is still active, but we are excited to add a new logo to the website! A small amount also trickled into one other existing portfolio company raising follow-on funding.VentureSouth members joined a wider set of “local investors” to fund some crowdfunding investments through Vicinity Ventures. Over the last month Vicinity Ventures has facilitated over $1.3M in community investment in public deals. You can check out these deals, and more at https://vicinityventures.co/ (but need to be a VentureSouth for the private deals, of course.)Liquidity!November was one of the very enjoyable months during which exiting companies sent more capital back to investors than investors sent to new investments.A company - who must remain nameless because the transaction documents swear us to confidentiality - was acquired in mid November. We sent distributions totaling over $1.4M to VentureSouth members and VentureSouth Angel Fund V investors. The “early exit” was a nice solid quick win, of ~2x in 15 months, at a 31% IRR. Not a Techcrunch article, no press releases, and no misleading TVPI markups along the way; just a solid (and, hopefully, consistent and repeatable) “southeastern angel” deal. And a success for the entrepreneurs, who continue to work on the technology with the strategic acquirer.That’s the eighth realization from the VentureSouth portfolio this year – the M&A markets appear to be opening up.Of course angel investing has bad news as well as good. Another portfolio company filed bankruptcy paperwork after some ill-judged follow-on round debt funding, working capital challenges, and growth issues compounded earlier personnel turnover and led to a hard-stop negative exit. We don’t see many of those, but this one hurt. Diligence:Behind the scenes, we skipped our screening meeting because we have plenty of companies in the diligence pipeline. But we made progress on those, with one company finishing diligence and getting investment, and two others reaching positive verdicts right at the end of the month.Portfolio: We processed incoming 3Q updates from ten companies. Notable public news from the portfolio in November included:Gradient Health presented at Medtronics, and at Johnson & Johnson; its Atlas platform is now live on Google Cloud Marketplace; and Atlas 2 just launched.MPath’s JAMA article (published in October) demonstrated that its direct-to-patient digital health intervention increased rates of lung cancer screeningPhinite was voted best Ag-tech startup of the year by Ag Startup Engine.Seal the Seasons is available at Hannafords.(And not a portfolio company, but Venture in the South interviewee Scale Social AI announced its $1.3M Seed round, with participation from several southeastern angel group efforts. Congratulations on getting this done!)Need a Black Friday deal from a VentureSouth portfolio company? Check out Healthycell’s Amazon bargains and a 24% discount at xxiv skincareOut & About:We coincided our Charlotte meeting with the Venture 135 conference - one of the best VC conferences in the southeast. Matt covered the “ask me anything” investor reverse pitches, and Paul covered the pitching crowd and was a general nuisance to organizers (sorry Avra). Great work Dan and the team.Next up: year end closings, company budgets, portfolio updates – and holiday parties. Merry Christmas from the VentureSouth team!

October is in the books! It’s always a busy month, and so here is a quick recap of what we got up to before our trick-or-treaters got their candy.Meetings:In a regular month of in-person meetings, we saw live startup pitches and in-person discussion in Charlotte, Greenville, Asheville, Charleston, Greensboro, Durham, and Chattanooga – plus our monthly online meeting if none of those in-person meetings were convenient!Thanks to everyone who joined us to pitch or update (six different companies - some existing portfolio companies, one soon-to-be portfolio company, and three potentially portfolio companies) and to hear and grill the pitchers.Investments:October was a fairly typical month for investing activity: VentureSouth’s angel investors and funds invested $902,248.57 this month. (You don’t get to be the #1 most active angel group in the State of Startups if you don’t invest a bunch.)This investment went to one new portfolio company (which we can’t publicly identify because the round is still open) and four follow-on rounds in existing portfolio companies.One of those was an unusual “milestone” round, where we had committed last year to invest further funds if the startup hit certain milestones. They did, so we did.VentureSouth members, alongside a wider set of investors interested in local alternative asset investments, also funded public investments through Vicinity Ventures, including closed rounds in 13 Stripes, Waters Edge Winery, and Carbon Country. You can check out these deals, and more at https://vicinityventures.co/ (You’ll need to be a VentureSouth for the private deals, of course.)Diligence:Behind the scenes, four companies pitched at our screening meeting at the beginning of the month, and two started our rigorous diligence gauntlet.Portfolio: Notable news from the portfolio in October included:Plantd officially announced its $22M Series B round.Zinnia won the HearstLab pitch competition twentyfour skincare launched product lines using both Zylo Therapeutics’ Z-pods and Yuva Bio’s Y100 ingredients in a great example of cross-portfolio pollinationGoPivot launched a Wellness Program at The Sharon in South Park in Charlotte.Out & About:Paul welcomed VentureSouth member Dan Haight to the Venture in the South podcast (video channel here; or subscribe on Spotify etc.), David reviewed AI trends with portfolio company CEO Josh Miller, and we covered regulatory challenges and positive developments.And, as usual, we participated in entrepreneur and investor events across the southeast. You might have seen: Jewel representing VentureSouth at the Venture Atlanta conference.Matt sharing his wisdom as a veteran entrepreneur with the Angel Capital Association.Paul helping Greensboro’s entrepreneurs with tips on how to raise capital; moderating a panel on valuating pre-revenue startups; and attending office hours at NEXT.Charlie spending time in Harrisonburg, VA - as well as selling beer at the Newberry Oktoberfest.Several team members helping with this season’s Clemens Angel Analyst program at Furman’s Hill Institute, covering diligence, team sheets, and cap tables.And more.Team:On a sad note, Alex left us this month, to further his career in a new role in Fayetteville helping companies with their financials. Alex made VentureSouth better and did a great job tracking and helping our portfolio companies. We’ll miss his dedication, analytical rigor, and team spirit, and really do wish him the best of luck in his new role.And on the Halloween updates, we had Wednesday, Katniss Everdeen, and many other miscreants on the streets on 10/31. All are accounted for.

The “dangers” of the liquidation preferenceDespite blocking so many angel investing “experts,” LinkedIn still fills our feed with plagiarized or AI-generated (or both?) stories on how:“This founder sold her company for a bajillion dollars and walked away with nothing.”(Just to prove I’m not making these up, here are just a few for you to endure:Entrepreneurs share these heartbreaking stories with VC-influencers. Every couple of weeks with this guy apparently.Good exits actually aren’t.Attorney-influencers do it. Repeatedly :)And it even happens in India!)These stories are, frankly, duckshit.But from the comments (of which there must be some that aren’t bots. Right?) they resonate – and people who invest and/or raise capital apparently have no clue about the investments they are making or taking. Yikes.So that you have no excuse to be surprised by liquidation preferences, here are the key facts:Angels and VCs buy preferred shares in companies. Preferred shares mean the shares have a liquidation preference – which means investors get their money back at an exit (aka liquidation) before other shareholders start getting proceeds.Liquidation preferences are standard, sensible, not dangerous, not evil. They protect investors seeing their investment immediately disappearing into the pockets of others.A 1x non-participating liquidation preference is essentially universal. (CooleyGo tracks this stuff.) It is very difficult to find a company with a 2x participating liquidation preference.If you are offered “worse” terms (a higher multiple, or participating preference) it’s because you are less investible, less creditworthy – and investors need better protection or upside than you offer without it. If you can raise money without a higher multiple or participation, you obviously should. “Distressed deals” have higher preferences.Preferences “stack”. If you raise 4 rounds of capital, that’s a lot of liquidation preference to pay out at liquidation.Liquidation preferences only become relevant if the founder does not succeed. If they turn $20M of investment into $20M of exit value, the founder has basically failed, and they shouldn’t get paid.Liquidation preferences are circumvented a lot. Founders almost always get salaries paid along the way, at the very least. At exit, acquirers regularly “carve out” proceeds or transaction bonuses to founders. Later stage investors often eliminate early-stage investors’ liquidation preferences. The “walked away with $0” trope ignores all these things to bait clicks, and to show how evil venture capitalists and angel investors are. While we no doubt are, liquidation preferences are not why!Why care? Liquidation preferences are certainly important, but these kinds of stories are likely all fabrications. You should (as an investor or founder) understand liquidation preferences and how they impact distribution scenarios. But if you are ever in a position to complain about them, it’s because something else much worse happened – and you’re complaining about a symptom not a cause.

VentureSouth vs The Angel Investment MarketReleased in late August, the Angel Funders Report from the Angel Capital Association – which you can learn about on the Venture in the South podcast episodes with John Harbison here, and Paul and David here – provides the latest insights into the angel investment market.We thought it might be interesting (to someone) to see how VentureSouth aligns with, and sometimes differs from, the market. So, here’s today’s bloggy analysis – VentureSouth vs the Angel Investment Market.Overall investment activity: The market: invested dollars down -33% in 2023, down another 6% in 2024; total dollars per group fell 16%, from $4.4M to $3.7M; deals per group fell 10%, from 17.5 to 15.8. (Smarter folk than me will have to figure out how those numbers can be simultaneously true!)VentureSouth: VentureSouth members and sidecar fund invested +28% more in 2024 compared to 2023. This was from both more investments (37 vs 33, up 12%) and more dollars per investment (up 14%).VentureSouth is a larger-than-average group (the #8 in North America by activity, in case you didn’t know!) and directly exposed to these market trends. We have definitely seen hesitation about investing since the 2021 over-exuberance. Nevertheless, we continue to focus on finding the best deals to invest in outside of these national trends – and in 2024 were able to grow activity healthily despite the wider market hesitancy.New vs follow-on rounds:The market: 52% of deals were “follow-on rounds”, the first year that follow-on rounds exceeded “initial” investments. On a dollar basis, the split was 55% follow-on : 45% new.VentureSouth: 81% of deals were “follow-on rounds”; on a dollar basis, the split was 75% follow-on : 25% new.In recent years, VentureSouth members have consistently make more investments in follow-on rounds than “initial” rounds. This is a function of a large, and generally healthy, portfolio: as existing companies raise again, we try to support them with further capital, if they remain attractive investments. Our follow-on rounds are generally smaller than initial investments – sometimes 10-25% the size of the initial investment check. This is substantially different from “the market,” where the average follow-on round was 14% bigger than the average initial check ($231K vs $201K). What is going on there? Your guess is as good as mine.Fewer board seatsThe market: 2024 saw a decline of “angels” on boards, with the proportion of deals with a member or observer falling from 30% in 2023 to 26% in 2024 – a continuing decline.VentureSouth: For the 8 new companies in which VentureSouth invested in 2024, a VentureSouth member signed up to serve on the board of 3 – 37.5%. Of the other deals, one deal was a convertible note without a board seat; and the other four companies had a board seat allocated to the round, but a large or more strategic investor took the board seat.Overall, VentureSouth often “leads” deals and with a larger check and great influence often comes a board seat; and we typically prefer equity investments over SAFEs and Convertible Notes, which again typically have board seats. Like the ACA, we advocate for involved board presence to give the companies the best possible chance of success.C-CorpsThe market: 95% of investments were in C-CorpsVentureSouth: 100% of investments were in C-Corps.With few exceptions, the administrative headache of LLCs outweighs the potential tax or other benefits, and so VentureSouth members almost always only invest in C-Corps.Are SAFEs winning?The market: In 2024, 38% of deals were preferred equity, 23% were convertible notes, 14% of deals were SAFEs, and 6% were common stock.VentureSouth: In 2024, the mix for VentureSouth was 38% of deals in preferred equity, 53% in convertible notes, and 9% in “other” debt and equity, and only 0.2% in SAFEs.For new investments in 2024 (excluding follow-on rounds), the mix was 77% preferred equity, 10% convertible notes, and 13% in “other” debt and equity; no SAFEs.In general, VentureSouth members only invest in preferred equity the first time we invest in a company; in follow-on rounds, as the companies raise various equity, convertible notes, SAFEs, and other bridge rounds, we participate to support the company (and assuming it remains an attractive investment) – but still retain our preference for the certainty and more favorable risk-adjusted returns of pricing equity rounds.Out of region:The market: Some regions now invest more outside their region than inside, with 49% of total dollars now “outside” the home field, but southeastern groups invest 66% of their dollars at home.VentureSouth: We invest 100% of our dollars “locally” – in the Southeast region in which we are based. This is a deliberate policy: we think the Southeast is an attractive region with great tailwinds, but even more importantly we want to know, supervise, and assist founders in our home towns.Group structure and longevityThe Market: The largest angel groups are over 20 years old and almost all operate both a network and a fund model, to accommodate investors with different investment interests and ideas.VentureSouth: We started our first group in 2008 – so, at 17½, are younger than the most established groups – but have been around long enough to have learned some lessons! We offer both a network model (you choose each deal you would like to invest in) and a fund model (you put money into a fund, and it invests automatically in the deals that VentureSouth members make).What other data points in the report would you like to see the “VentureSouth equivalent” of? Let us know and we’ll be happy to share!