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Sep 9, 2019

Show Me the Money! Opportunities for Early Stage Investment

Sponsored Content provided by Heather McWhorter - Interim Director, UNCW Center for Innovation and Entrepreneurship

Who can forget the 1996 film, Jerry Maguire, and its iconic phrase “Show me the money?" Early stage startup entrepreneurs have their own twist on that phrase. They’re saying, “Show me the funding!"

Given the venture deals you read about in the news, you could get the idea that the U.S. is awash in startup capital and it’s driving unprecedented levels of new innovation.

Unfortunately, that’s not the case. It may appear that U.S. investors are plowing huge amounts of money into start-ups, but a closer look reveals both angel investors and venture capitalists are increasingly funding larger, more mature opportunities. Unicorn companies (valued at $1B+) like Airbnb, DoorDash, and Houzz, are driving valuations to heights not seen since the dot-com bubble.

So what is the story on funding for new startups?

The reality is that the U.S. has an $8 billion annual shortfall in early-stage venture investing and that shortfall has been increasing. Larger sums are going into fewer deals. According to the National Venture Capital Association, in 2017, U.S. companies raised $82 billion across more than 9,000 deals and the trend of fewer companies raising larger amounts became more pronounced. Unicorns were responsible for about 25 percent of the capital dispersed in 2018. Nearly half of that total went to just one industry: software (48 percent). Sixty percent went to just three metro areas: the SF Bay Area (40 percent), New York City (10 percent), and Greater Boston (10 percent).  

How about closer to home? What’s happening with early stage capital for our local entrepreneurs?

North Carolina certainly isn’t immune to the mega-trends, but our corner of the state has had some good news for early stage startups seeking $5,000 to $1 million.

In July 2018, Ironclad Brewery announced it would use its profits to create Ironclad Ventures to contribute to the growth and achievements of Wilmington’s startup community. It invested $50,000 in Petrics, a startup that develops digital products and software related to pet health around that time. The brewery is also the host location for Wilmington Angels for Local Entrepreneurs (WALE) meetings. WALE made the first outside investment in Brilliant Sole, a bootstrapped startup advancing a shoe-based sensor system for the virtual reality industry. Wilmington Investor Network (WIN) has been operating in Wilmington since 2004. Several WIN members were among the 17 investors attending the Connect Investor Forum hosted by the UNCW Center for Innovation and Entrepreneurship (CIE) and tekMountain during the Cucalorus Festival last November.

The good news continued in April of this year when VentureSouth, an angel investment network based in Greenville, South Carolina, selected Wilmington as the location for its fourteenth chapter. VentureSouth was familiar with Wilmington, having invested in KWIPPED Inc. The chapter is forming and will soon be actively reviewing VentureSouth-vetted companies seeking $250,000 to $1 million.

Thanks to NC IDEA Foundation, ventures not quite ready for investors can get up to $5,000 to achieve targeted milestones through the CIE Accelerator Fund. The CIE has funds available and is encouraging entrepreneurs to apply for funding that can help them become investor-ready.  
 
Diane Durance, MPA, is director of UNC Wilmington's Center for Innovation and Entrepreneurship (CIE). The CIE is a resource for the start-up and early-stage business community to help diversify the local economy with innovative solutions. For more information, visit www.uncw.edu/cie.  

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