A local Web-based company that most of WNC has never heard of is positioning itself to be the break-out high-tech company in our region. But more importantly, says CEO Bill Ward, Asheville’s BUILDERadius (www.builderadius.com)—which offers software and Web-based services geared to the construction, tax-assessment and real-estate-development industries nationwide—could become the catalyst that positions the region’s fledgling high-tech economy for the big time.
The company, which employs 30 people in its downtown offices on Biltmore Avenue, has its sights set on being acquired in the next few years. But rather than take the money and run, Ward, who also founded the local Blue Ridge Angel Investor Network (BRAIN), says an acquisition or “exit event” will improve the fortunes of other local entrepreneurs and companies, high tech or not, and also help attract outside entrepreneurs.
Jim Roberts, the founding and now former executive director of the Blue Ridge Entrepreneurial Council, says the local business community is keeping a close, sharp eye on BUILDERadius and Ward’s strategy. Its success, he believes, could be critical to the area’s economic future.
“If there is a big payout,” Roberts explains, “the founders get a big payday where they can become angel investors and serial entrepreneurs. The employees get a big payday and can then become entrepreneurs. And yes, it proves it can happen [here] and attracts other entrepreneurs, and you have created a successful entrepreneur cycle or entrepreneurial culture.”
And just how important is that? In a region that currently receives scant venture capital or angel investment, it could prove vital (see “The Biz,” Oct. 10 Xpress).
“Think Dell in Austin; think Microsoft in Seattle, and Red Hat in the Triangle [the Research Triangle Park area],” says Roberts. “The success story becomes the magnet for other entrepreneurs.”
“We have turned down [institutional] venture capital several times, but we have raised over $7 million in angel capital—local investors and individuals,” says Ward, who notes that approximately 90 percent of his angels are located in WNC and upstate South Carolina.
“We have had multiple venture capitalists approach us interested in investing money. That’s right for some people, but we’ve chosen not to do that,” Ward says. “It’s sort of like inviting a gorilla to supper—if a food fight breaks out it gets real messy.”
Institutional investors usually place many more conditions and expectations on a company when they invest in it, as opposed to individual investors, who typically take a more laissez faire approach. Venture capital firms also often prefer to be more involved in day-to-day operations and strategy, or at the least have a say in how companies are managed or who is on the management team.
Michigan-based Manatron Inc., a provider of enterprise-level, integrated property software systems and services for state and local governments, recently formed a partnership with Ward’s company to supply tax assessors in more than 800 U.S. counties with up-to-date building-permit data. That company, along with others, has approached Ward with an interest in buying his company.
But, says Ward, “We’re not quite there in terms of where we want to be when we sell, the rate of return we want to bring our investors and that sort of thing. The goal over the next two to three years is to get revenues up into the $15 million to $25 million range annually,” says Ward, who speculates that in 2008, company revenues could potentially hit $5 million. However, multiples of revenues from pending or potential deals could easily boost the company into the range it’s seeking in the timeframe that Ward envisions.
“So you get those [investors] making five, 10, 15 times their money and then they get a pretty good feel for wanting to do that sort of thing again. So a liquidity or exit event for BUILDERadius will essentially be a catalyst for other companies and entrepreneurs in the area,” Ward says. “Nothing breeds success like success—and when we get an exit and liquidity event it’s essentially like going to the casino and playing with house money. Like anything else, if people do something and it’s an enjoyable experience, they’ll do it again. That’s what we want to do. We want to create that really enjoyable experience for all these local investors so they’re inclined to do it again. … The higher profile flash we can make, and the bigger waves we can make, the better that it helps everybody.”
That’s yet another reason why BUILDERadius has turned down venture capital firms, because they could have an undue influence on how such an exit event is structured. And it would also mean that the payout leaves the area. “Whereas [if] we stick with the local angel investors, then all that money comes back here to Western North Carolina and upstate South Carolina—and then,” says Ward, “it creates that engine.”
Winner to head foundation: The Z. Smith Reynolds Foundation board has selected Asheville native Leslie Winner, a University of North Carolina administrator with broad experience in several areas, to become its new executive director. She succeeds Tom Ross, who left in the summer to become president of Davidson College.
Winner, now vice president and general counsel for UNC, has long been an advocate for the poor and under-represented in the state. “Leslie Winner is a native North Carolinian and has exceptional experience in a broad range of issues that are important to the people of our state and the work of the foundation,” said Jock Tate, the foundation board’s president, in a statement.
Previously, Winner was a partner in a top law firm known for its work on behalf of civil and human rights. She also served as legal counsel to the Charlotte-Mecklenburg Board of Education.
The Winston-Salem-based organization is one of North Carolina’s largest and most influential private foundations. It is funded by two trusts with assets of more than $470 million. During its history, it has made grants of more than $400 million to projects in all 100 counties.
Local subprime loans grow: Subprime loans, a mortgage class that has become a leading cause of the nation’s severe housing downturn, made up 21.1 percent of home mortgages in the Asheville metro area last year, according to statistics the Wall Street Journal compiled from federal data. That figure is up from 16.1 percent in 2004, the paper reported on Oct. 11.
That’s the bad news. The good news is that the area’s housing market remains robust comparaed to the rest of the nation, and the Asheville-area subprime figures still trail the national average. Nationwide, subprime mortgages made up 29 percent of the total last year, the newspaper reported, though some economists such as the bearish Nouriel Roubini argue that subprime loans actually make up about half of all purchase loans nationwide. North Carolina’s average was 24.4 percent, according to the newspaper’s analysis.