Betting on South Carolina
Nov 01, 2017 12:50PM
● By Emily Stevenson
By Brian Sherman
Photograph by Stan Foxworthy of Foxworthy Studios
Prospects for local entrepreneurs soared to a new and lofty level early this year when an energetic and experienced quartet of venture capital experts formed a company that hopes to invest at least half the money it raises in emerging companies in Charleston and the Southeast.
Good Growth Capital began assembling its team and seeking investors in January 2017 and has already put money into four companies, three of them based in Charleston. The firm’s four managing partners, Carolyne LaSala, David Mendez, John Osborne, and Amy Salzhauer, all with impressive resumes in the financial world, are confident that lower operating costs and a wealth of local executive talent will make the Charleston area fertile ground for early stage technology companies to grow and prosper.
“The timing is right for a lot of reasons,” Osborne pointed out. “We’re catching it at just the right time and positioning the firm as that go-to source of capital for the region. We have the opportunity to look at lots of opportunities and build a nice portfolio.”
“South Carolina is a great place to start a company,” Salzhauer added. “We’re excited to be working with the state Department of Commerce and the Charleston Regional Development Alliance.”
Salzhauer said Good Growth initially hopes to raise $25 million. Mendez predicted that the company eventually will put together a series of $40 million to $50 million funds.
He added that Good Growth will work with other funds in cities throughout the South – Atlanta, Charlotte, Raleigh and Nashville, among others – to put together deals that bring entrepreneurial dreams to fruition and, as a result, make the economy stronger and more resilient.
“None of us have huge funds, and it’s not really a competitive situation,” Mendez said. “We’re happy to see a new fund. Lots of funds don’t work together in places like New York, Boston, and Silicon Valley.”
Osborne pointed out that 75 percent of the nation’s venture capitalists are concentrated in three states. He went on to say that the situation is changing and that opportunities for entrepreneurs are growing in places outside the traditional entrepreneurial breeding grounds of California, New York, and Massachusetts.
Good Growth’s Charleston-based investments include Questis, which created a platform that allows companies to offer financial wellness tools as an employee benefit; PT On Demand, the winner of the prize Good Growth sponsored at the 2017 Dig South Conference; and Dynepic, which is creating a social platform that allows brands to safely interact with children under the age of 13.
With five venture partners along the Eastern Seaboard that support Good Growth with expertise in multiple industries, the company also is seeking to stoke the entrepreneurial spirit in locations outside the Southeast. Good Growth is investing in Rare Genetix, based in Cambridge, Mass., which is developing molecules that target the genetic causes of diseases such as cancer. Two other companies are in Good Growth’s future, according to Salzhauer – one in the Research Triangle in North Carolina and another in both Charleston and Boston.
In return for raising money to help emerging companies launch and grow, Good Growth Capital typically owns a minority share in the company, has a seat on its board of directors, and serves in an advisory, but not operational, capacity. LaSala said Good Growth might provide guidance or help connect the new company to resources it might require.
“We may help if they are struggling with an issue or need an introduction to a potential customer,” Mendez stated, while Osborne added, “We have a vested interest in their success.”
In addition to providing access to capital, Good Growth will help companies succeed by establishing an executive council made up of active and retired corporate leaders who will serve as mentors and advisors to business owners.
“Members of the executive council can be helpful to an emerging company, even with a very small time commitment,” Osborne said. “This will be a network of highly skilled people who can elevate the aptitude of the companies in the region. A lot of communities don’t have those kinds of assets.”
For new companies, Charleston has advantages over other markets. For one, the competition isn’t as great as in other cities, and it’s cheaper to operate a company in the Lowcountry because salaries are lower. And, LaSala added, there’s very little poaching – companies stealing other companies’ talent.
The managing partners at Good Growth Capital have a wealth of experience in the worlds of finance and technology and in launching new and successful companies. For example, LaSala spent 15 years in software and mobile technology and has launched and directed several businesses for Apple, including iTunes Music US, iTunes Europe and the App Store. Mendez, with more than six years in venture capital, has been an engineer and business manager with DuPont, Conoco, and General Electric and was a founder and managing partner of two early stage venture capital investors. Osborne has spent more than 10 years in banking and investing and co-founded The Harbor Entrepreneur Center. Salzhauer was the chief executive officer of the venture creation firm Ignition Ventures and helped start several science-based startups based on technologies from the Massachusetts Institute of Technology, Harvard, and Columbia University.
The team also includes venture partners Milt Alpern, the former chief financial officer at Benefitfocus; Maureen Stancik Boyce, PhD, chief operating officer at Ignition Ventures and a mentor at MIT’s Sandbox Fund, which fuels student-led startups; Kathleen Kennedy, a director of special projects at MIT; Mark Johnson, who established several digital media brands from scratch; and Neil M. Thakur, PhD, a health policy expert at the National Institutes of Health.
“Our team is way overqualified for a fund of this size,” Salzhauer said.
“The unique thing about our team is that we’ve all done stuff. We can empathize with the journey. Other venture capital firms have never felt what it’s like to build something from zero,” Osborne said.
“Our team rocks,” Salzhauer concluded. “We have so much fun doing this. We love what we’re doing. And we’re investing in great companies that we think will do very well.”