Venture capital is a boon to worthy businesses that need funding to spur growth and ascend to the next rung of the business ladder. “Unfortunately,” says one Asheville-area business owner seeking institutional and individual “angel” investors for his fledgling Web-based business, “the ability to attract that type of funding here absolutely sucks.”
The entrepreneur, who asked to remain anonymous for fear of spoiling potential future deals, is looking for seed money to boost his fledgling business—something that venture capitalists are loathe to do because of the risks inherent with startups.
While venture capitalists here and throughout the nation have said they would love to find worthy companies locally to invest in, the area just doesn’t have enough attractive companies, especially high-tech companies, to whet their appetites, says Jon Stanier, managing director of Carolina Financial Group, a VC firm based in Brevard.
Venture-capital firms, and wealthy individual “angels” seeking investment opportunities, are placing their bets mostly on out-of-state companies. In North Carolina, VC funds are overwhelmingly going to companies and entrepreneurs in the Research Triangle Park area and Charlotte. The Asheville area is at further disadvantage because, unlike the RTP, the area is bereft of major research universities that typically serve as incubators for business development, Stanier says.
In WNC, there has been virtually no VC funding for WNC companies so far this year, according to Jim Roberts, the founding executive director of the Asheville-based Blue Ridge Entrepreneurial Council who now serves as a senior consultant to an Austin, Texas-based economic-development firm. In 2006, the area attracted approximately $4.1 million in such funding, largely from angel investors, with the biggest sums raised by the Immaculate Baking Co. and BuilderRadius.com, he says.
While that $4.1 million is a significant increase from just a few years ago, when WNC received virtually no venture capital, it pales to funding raised elsewhere in the state. “We’ve come a long way, but we’ve got a long way to go, unfortunately,” says Stanier.
In 2006, North Carolina companies raised more than $533 million in venture capital investments, according to the Council for Entrepreneurial Development’s annual North Carolina Venture Report. The total represents a slight increase from the $530 million raised by North Carolina-based companies in 2005. Slightly more than 93 percent of that money went to expanding and late-stage companies in the RTP and Charlotte areas.
Nationally, companies raised more than $25 billion in private equity capital, according to the report.
North Carolina ranks 10th nationally in total venture capital investments in 2006, retaining its place in the top 10 for the fourth time in the last five years. The state remains the leader of the Southeastern region; however, other states that have invested heavily in innovation (such as Maryland and Pennsylvania) passed North Carolina in 2006 in total venture investing. California and Massachusetts, traditionally strong states, repeated as the top two in both dollars and deals. Together the two states received VC funding in excess of $15 billion.
But if it sounds as if the local quest for venture capital is hopeless, it’s not. For starters, entrepreneurs should contact BREC, which is part of AdvantageWest, the state’s regional economic-development commission. BREC also hold its annual Carolina Connect conference on Thursday, Oct. 11, at the Grove Park Inn & Spa. Visit www.brecnc.com to register. In addition to keynote speakers N.C. Treasurer Richard Moore and venture capitalist Guy Kawasaki, attendees will also be offered educational sessions, which include “Business Plan Bootcamp,” as well as sessions on product development and innovation and financing tools and sources.
Making the list Inc. magazine has ranked Plasticard Locktech International number 3,443 on its first-ever Inc. 5,000 list of the fastest-growing private companies in the nation. The Inc. 5,000, an extension of the magazine’s annual Inc. 500 list, catches many businesses that are too big to grow at the pace required to make the Inc. 500, as well as a host of smaller firms. PLI is the nation’s largest hotel keycard manufacturer. Founded in 1988, PLI is headquartered in Asheville and works with most major hotel chains as well as thousands of event planners and advertisers, producing millions of keycards annually, along with a variety of other products in plastic and paper. The company has expanded to include international markets and has achieved in excess of 20 percent growth per year over the last five years.
Small biz help Two free Small Business Financing workshops offering on-site small-business loan applications and other small business information will take place in Hendersonville and Asheville on Tuesday, Oct. 30, 2007. A representative from the Small Business Administration will discuss the availability of loan programs for small business owners.
For business owners requiring less than $25,000, SBA’s Community Express Loan Program will be featured. Community Express Loans are designed for women, veterans, minorities and rural entrepreneurs. Both start-up and existing businesses are eligible. Participating lenders in this program provide financing from $5,000 to $50,000. Entrepreneurs receive benefits through this program with additional technical assistance to help their success.
To apply for a loan, applicants must bring a copy of the front and back of their driver’s license; either a federal tax ID number if a corporation, LLC or partnership, or a social security number if a proprietorship/self-employed; and a check from a business checking account for possible loan processing if the loan is approved. For more information, contact Mike Ernandes at (704) 344-6588.