Let’s say you’re an investor with some money in your pocket, and you’re looking to invest in the Upstate.
Sure, you could take a more traditional route and buy up some real estate.
But if you can spare a moment of time, local entrepreneurs Ryan Johnston and Ryan Heafy have a pitch they think you might be interested in hearing.
As the founders of 6AM City, the fastest-growing newsletter-first local media company in the United States, Johnston and Heafy are in expansion mode. Founded in 2016, the company recently closed a Series Seed funding round led by Harbright Ventures and VentureSouth, which will fuel 6AM’s growth by double over the next year.
Known locally as GVLtoday, 6AM operates in six other existing Southeastern markets — COLAtoday in Columbia, for example, and CHStoday in Charleston, among five others — and in the coming weeks it will be launching NASHtoday in Nashville, Tennessee. That growth has allowed the company to reach 300,000 daily subscribers.
To date, the company has raised almost $4 million — a commendable figure by any assement, but one that is made more so by the fact that 95% of that funding came from angel investors in the markets 6AM serves.
“What was really unique, being in our ecosystem, was the ability to connect with our investor network through our product,” Heafy said.
Which brings us back to that pitch Johnston and Heafy have for anyone looking to invest in the Upstate.
“Particpate in that ecosystem,” Heafy said. “Step out of traditional real-estate-type investing, and start putting more money into the local tech and entrepreneurial ecosystem.”
Both Heafy and Johnston attribute their success to the local ecosystem, especially organizations like VentureSouth, which operates angel investment groups and funds comprised of more than 300 accredited investors across the Southeast. For the past few years, VentureSouth, alongside SC Launch, a mentoring and support program that provides grants through the South Carolina Research Authority, has been expending a huge effort into teaching angel investors how to participate in that entrepreneurial ecosystem, investing in companies just like 6AM.
Entrepreneurial ecosystem: a collection of interdependent companies, groups and individuals whose relations with one another, either directly or indirectly, foster and support the creation and growth of new ventures
“By bringing more people to the table regionally, they’re able to get more funding,” Johnston said. “So it’s creating opportunities both ways. The entrepreneurs have the ability to tap into a larger network, while the investors benefit from that growth.”
A key component of that educational process is tipping off angel investors to vehicles that can make investing in startups more viable — specifically, the South Carolina Angel Investor Credit.
Heafy called it “one of the more interesting tools supporting the entrepreneurial ecosystem in South Carolina.”
The credit, which was just renewed in 2020 to run through 2025, allows angel investors to claim a tax credit that is equal to 35% of the investment amount. It can be taken up to 50% in the year of the investment, with the remainder available in subsequent years, up to 10 years from the initial year of investment.
There are a few limits, to be sure; there’s a cap of $100,000 for a single taxpayer in a single tax year, meaning an investor can claim a tax credit for up to $285,714 (35% of which would equal $100,000), although married taxpayers can get double that. The credit can also be sold, transferred or exchanged, but only once.
Not every business qualifies, either. First off, the business has to be less than five years old, be headquartered in South Carolina and have 25 or fewer employees in the state. The company also cannot have a gross income exceeding $2 million in any previous fiscal year. Other than that, companies are approved so long as they are engaged in manufacturing, processing, warehousing, wholesaling, software development, IT services, R&D and certain service-related facilities.
Johnston said that alone has made for a “considerably different” ecosystem than that which existed when 6AM started out, which Heafy reiterated.
“What we’re seeing too is better synergy among organizations,” Heafy said. “Venture South, NEXT, SC Launch: They’re all collaborating and looking more intentionally at the opportunities out there to invest locally. The entire region specifically has spread its wings into the neighboring states, bringing deal flow and access to capital.”
For the time being, neither Heafy nor Johnston see that growth as slowing down, especially not in Greenville. The live-work-play balance, the growing pool of skilled workers, and the culture of mentorship prevalent in the entrepreneurial ecosystem has made it one of the most appealing areas for entrepreneurs looking to start out.
“It’s all been pivotal in creating an ecosystem that’s beneficial to us,” Heafy said. “There are plenty of resources out there.”