The Angel Investing Trifecta

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Make money. Have fun. Do good.

Who wouldn’t like to do all three of those things? At once? While we can’t guarantee the outcomes, we certainly work as hard as we can to hit that trifecta as part of our efforts at the Upstate Carolina Angel Network (UCAN).

Last week we had two opportunities to do something we probably don’t do as often as we should: go back to basics and tell our story about good, fun, and money. We were honored to be invited to give an update to the Greater Greenville Forum on Monday, and we were delighted to host our first-ever Open House event on Wednesday at the Commerce Club. At both events, we provided an overview of our approach to angel investing and a reminder that there’s always an open invitation for new investors to join us.

So if we missed you at one of those events, here’s a quick recap of the three essential elements of our story.

Make money

Angel investors are individuals who invest their own capital in risky early-stage ventures (unlike venture capitalists who raise funds from institutions like pension funds and endowments).

It turns out that investing in startups is very risky business, and the hard truth is that most startups fail. Given the risks — and the fallout of the dot-com bust — individual angels began to realize the benefits of leveraging their collective reach and insights to make better investments together in groups rather than as solo acts. They learned the critical value of discipline, diversification, diligence, and patience in creating favorable odds for generating positive returns on their startup investments.

UCAN was formed in 2008 to provide local investors the necessary infrastructure to build a diversified portfolio of early-stage investments in our region while leveraging the insights and expertise of a network of local peers. Today, UCAN is part of VentureSouth, a collection of a dozen angel groups and funds across the Carolinas that leverage the power of more than 200 investors and a robust evaluation process to efficiently and effectively deploy early-stage capital.

With the structure and discipline of our process, we believe our portfolio is on track to meet the benchmark returns from three separate angel investor returns studies over the last decade that have shown consistent rates of return exceeding 20 percent for angels in groups. Thus far, our failure rate is far below the 50 percent benchmark rate, 80 percent of our capital is still actively deployed, we’ve generated annualized gains of 60 percent on 11 realized investments, and we anticipate additional returns in the next 12 months as companies in our portfolio mature and exit to public markets or strategic buyers.

We can make no guarantees of course, and the risks are indeed high (and therefore angel investing should be a small part of an overall portfolio), but the financial rewards can be worth it. 

Have fun

Our investors come from a wide array of backgrounds, and they bring unique insights and expertise to the evaluation of each company we review. And of course the entrepreneurs we meet with bring a never-ending stream of new ideas and talent and technologies and energy. When we get the investors and entrepreneurs in the same room, the dialog and debate and learning are insightful and invigorating – worth the price of admission according to many of our investors.

Unlike most public company investments, angel investors can enjoy personally sharing their experiences and battle scars with entrepreneurs and management teams, giving them the opportunity to have a direct impact on the company’s direction and success.

Angel investing is a hands-on, contact sport, and our investors enjoy having a front-row seat for the startup’s journey (not to mention our periodic investor education and social events).

Do good

If we want long-term economic growth in our state, we must create opportunities for entrepreneurs and their teams to thrive here creating the companies and jobs of the future. In our part of the world, early-stage capital is exceedingly scarce, so our investors are doing a great good for our long-term economic future by making risky bets on startups.

Beyond that, many of the companies we support are working on solving problems that can literally change the world: novel cancer therapies (CharlestonPharma) and diagnostics (KIYATEC); improved educational and health outcomes (ActivEd) and cleaner, quieter, more efficient mass transit (Proterra); smart, in-home medication dispensers (PharmRight) and the connectivity and interfaces to connect them (Zipit Wireless) and to connect teams (TipHive).

There’s a lot more to our story, of course, and we’d love to share it with you if we missed you at our events. To learn more about how you can make money, have fun, and do good, visit at venturesouth.vc/ucan.


Dunbar-Headshot-2012---2Matt Dunbar is the Managing Director at UCAN.

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