With the growing Silicon Harbor tech scene, many startups feel that the one big missing segment is local capital dedicated to assisting early stage companies. A new venture capital fund, Silicon Harbor Ventures, has launched in order to fill in this gap. With an initial $1 million investment, its goal is to help early and growth stage technology companies in the Charleston area.
ABOUT SILICON HARBOR VENTURES
Silicon Harbor Ventures is a dedicated capital angel fund managed by investors. This investor-managed structure provides the benefits of angel investor clubs with a committed capital venture fund. Structures include: Equity, revenue-based loans, secured loans, debts plus warrants, preferred stock, and convertible bonds with caps.
Growing companies may also need help with fundraising and scalability. In addition to capital, Silicon Harbor Ventures will provide mentorship through its mentor board, comprised of experienced senior technology advisors. This board will aid and nurture the development of companies by guiding decision making as they grow.
“Some companies may need help sporadically and some more often” said managing partner Michael Knox. “Maybe someone doing their first round of fundraising needs someone to talk to about the best process to move forward. Silicon Harbor Ventures will provide that sort of guidance. Other companies might want to open a second location and maybe someone on the mentor board has experience doing that. We really want to provide support to these companies in any way we can—whether it’s business guidance, accounting guidance, or legal guidance. We want to help them achieve their goals as cost effectively as possible.”
Companies will also be able to leverage the venture fund’s affiliation with the Charleston Digital Corridor—which will give them access to office facilities, talent, and business concierge services. The relationship with the Corridor helps the fund build the right network of mentors. “It helps us understand the potential companies that we’re investing in—the people and how hard they work and how smart they are—so we think that’s an important relationship,” said Knox.
Silicon Harbor Ventures aims to support the entrepreneurial spirit in Charleston and generate good return for the investors of the fund. “We want to find ourselves situations where we’re in a position to not lose money, but we can provide capital to grow. Some people don’t think that’s possible in venture capital. Let’s say your company is building an app and has a huge amount of data that they’ve built into that app. In the event that app is not successful, there may still be a lot of value to the data that they’ve gathered that can help us get our money back.”
Experienced investors who have owned and operated technology companies are being assembled onto the management team, which will be comprised of about twenty partners. These investors have also worked and invested in the technology sector, adding value to their analysis of companies to ensure the fund makes the smartest investments. As an angel fund, the majority of its investors are active in the evaluation and due diligence process of each application. Each member will be required to make a minimum $250,000 initial investment to join the venture fund and will be heavily involved in the decision making process. Funding is based on the collective voting of all the investors.
Knox says “We are looking for people who can bring value to the investment process but who also fit in personality-wise by being able to work in groups. We want to do this the right way with people with the right experience to make it a fun and enjoyable way to invest in companies and help them grow. We are looking for people with right spirit and right attitudes.”
THE APPLICATION PROCESS
Applicants can submit their application through the Silicon Harbor Ventures website to be evaluated through a multi-step review process by the committee.
Applicants must meet the following criteria:
- An established and experienced management team who is passionate and committed to achieving quantifiable goals
- Expansive market opportunity and a compelling market edge
- Significant potential for overall growth and technological innovation
- Clear path to profitability
- Management with significant financial resources committed to business. You must eat your own cooking!
Applications must contain the following:
- A business plan outlining the company’s history (both product/service and financial) and the company’s plan for the future
- A history of capital investments and a capital structure table
- Information about the principals, their investment in the company and compensation levels
- Detailed use of proceeds
- Ideal investment structure
Once the application package has been evaluated, the applicant company will give a presentation to the investor committee. If selected as a potential investment, the company will work with a committee of members through the due diligence process before the investment gets made. The fund will then work closely in providing guidance and monitoring progress of the investment company.
Knox emphasized that Silicon Harbor Ventures is seeking applicants who are completely invested in their startup, and the venture fund can help those companies grow to the next level.
“We want to see people who have a sensible business plan and a commitment to execute it for us in order to fund that entrepreneur. This is more than just helping someone with an idea in a garage. We want an entrepreneur who is all in…who has quit his job and invested all the money possible into this venture because that shows they’re a strong believer. And that is very important because if someone doesn’t want to eat their own cooking, I’m not sure we want to eat it either. We’re looking to help companies grow from say two employees to five. Or to help a company with demand for their product to be able to afford to hire another developer. Even companies with working capital intensive businesses can grow really quickly, which can cause internal cash flow problems. We can help there too.”
Knox says Silicon Harbor Ventures plans to continue to raise more capital and wants entrepreneurs to know the venture fund is here to help as the Charleston tech scene continues to grow:
“Charleston is a cool place that attracts the sort of entrepreneurial people that need mentoring and capital and has an entrepreneurial spirit. It’s a very interesting time here with a lot of those companies. We’re right at the cusp of it being a mini technology hub. We want to make sure the companies in the Charleston area who do need capital and have growth plans know that we’re here and have the capacity to review investment opportunities and make sure that people who have smart ideas with good business plans are getting the money they need to execute them because that’s really the point of the whole thing.”