Since its founding in 2008, our next guest’s organization has invested over $100 million in 135 startup companies across our state and the Southeast, helping entrepreneurs grow businesses and create jobs in the region's innovation economy. Mike Switzer interviews Charlie Banks, managing director of VentureSouth in Greenville, SC.
TRANSCRIPT:
Switzer: Hello and welcome to another edition of the South Carolina Business Review. This is Mike Switzer. Since its founding in 2008, our next Guests organization has invested over $100 million in and 135 startup companies across our state and the Southeast, helping entrepreneurs grow businesses and create jobs in the region's innovation economy. Charlie Banks is managing director of Venture South. He joins us by phone now from his office in Greenville, South Carolina. Charlie, welcome back to the program.
Banks: Thanks Mike, appreciate it.
Switzer: So it's been a while since we've talked to you. for our listeners not familiar with Venture south, tell us what it is that you guys are doing.
Banks: We've been around since 2008. We are an early stage investment firm based in Greenville. Recently had some pretty good news about kind of some milestones that we've passed that at the beginning we didn't quite think were possible. So, we're really proud of it. But, we kind of operate as a large, investor syndicate as well as a family of funds that invest alongside the active angel investors as part of the network.
Switzer: All right, so walk us through the mechanics of what happens, you know, inside the organization.
Banks: Yeah, sure. So we look at about 20 or 30 deals every month, kind of based all over the Southeast. The process starts with a company will enter into the pipeline with us. We'll take a look internally, make sure it kind of fits the buy box, if you will, of what we're looking to invest in. and then our staff will narrow that down to a handful of companies that we then bring through a formal screening process that happens every month. we'll take four or five companies, we will invite our, investor membership base to hop on a zoom call once a month. and we will allow the companies to make a presentation. You know, it's usually about 10 or 15 minute pitch followed by 10 or 15 minutes of Q and A. And then we ask the members to vote on which company they want to see move into a formal due diligence process. So we'll take the top vote getter. We'll put together a diligence team comprised of any of our, members that want to participate in our due diligence process. Our staff, usually one of the managing directors, myself, Matt Dunbar or Paul Clark. and then we'll spend the next four to six weeks really peeling back the covers of the company and doing a deep dive diligence. And then, assuming that what we find is positive, we will present the diligence report to the investor base and then the Investor base can opt in or opt out. For the folks that opt in, we will put together invest in the company. And then as I mentioned earlier, we have a family of funds that is designed to co invest alongside that active investor base. We'll do that 8 to 12 times a year.
Switzer: Out of these 135 startup companies that I mentioned in my introduction, can you tell us what percentage have been successful that have moved on to further rounds and then maybe even exited with some nice profits for everybody?
Banks: Yeah, sure. So we've had 33 company exits and obviously we always want to have more but you know, this is a, it's a risky asset class. We've had some that we've, we've written off that have closed down. But you know, the goal is to find companies that we feel like are going to be successful and drive positive returns for the investors that are a part of ventures out.
Switzer: And I guess the overall returns have been positive enough that things are still going.
Banks: Absolutely. Yeah. Yeah. So we've made money, certainly we've made money doing this. You know, we're looking forward to, looking forward to doing it for a long time.
Switzer: And so what are these basic criteria, these checkboxes that you told us that the company needs to meet before you even accept them into the next steps?
Banks: Yeah, so it's typically we are looking at about 10 different criteria that we boil it down to. The two that make them, I guess give it the most weight, that we put the most strength in is the team. We want to have a good gut feel as to whether or not this team is the one that's going to execute on the plan to build the company and meet various milestones. The second part of that is exit strategy. We want to have a good and comfortable feeling that the company is building itself to be acquired at some point, ideally within a three to five year time frame. So a lot of time with the team. If you spend a lot of time on looking at the exit comparables, in their space and we feel like that, you know, they've got a good go to market plan, they've got a, they've got a great product or service that we feel like, you know, are gonna, gonna grow in their space, then that's, you know, that's typically the first lip disc if you will, to whether or not we would like to see them move forward and ultimately make an investment.
Switzer: Well Charlie, congratulations on crossing this $100 million milestone and thank you for spending time with us today.
Banks: Well, thank you so much, Mike. I really appreciate it.
Switzer: Charlie Banks is managing director at Venture South. He spoke to us by phone from his office in Greenville, South Carolina. And we will have a link to the organization posted at our webpage so you can learn more. SouthCarolinaPublicRadio.org where you can hear this show again. And you can hear us again wherever you find podcasts. With the South Carolina Business Review, this is Mike Switzer.
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