April 12, 2013

New Angel Investor Syndicate Coming To Charleston

Brendan Kearney  /  Post and Courier

It's become a tired refrain, voiced by tech businessmen and economic development and university officials alike: Charleston needs more investment capital to realize its potential.

Mount Pleasant medical diagnostics salesman Gavin McCulley has heard the talk and experienced the issue, as a young man trying to open an Irish pub in the area, then as part of a local angel investing duo.

Looking to increase the action, McCulley, 34, was on the cusp of launching the Holy City Angel Club in February when he happened to meet Eric Dobson at a downtown Starbucks.

When Dobson, chief financial analyst at the Kansas City, Mo.-based Angel Capital Group, learned of McCulley's plan, he said, "I can't believe you're trying to do what we do," McCulley recalled this week.

After a little more talk, they struck an agreement: McCulley would launch an Angel Capital Group chapter in Charleston.

"It'll fill out a big missing piece in Charleston," McCulley predicted.

Charleston already has a similar group of wealthy individual investors, Charleston Angel Partners, but McCulley explained how ACG's centralized structure allows for better deal flow and more flexible investor participation.

"With Angel Capital Group, we flip it on its head," McCulley said. "The deals are sourced on a national level with a particular focus locally ... but we welcome companies from all over the country to apply."

An Army veteran and military adviser to the hit television show Army Wives before embarking on Twin Rivers Holdings with Detyens Shipyards Chairman Loy Stewart, McCulley said he has already recruited the requisite 10 people to start the ACG chapter, and hopes to bring another 20 on board.

"It's so suited for Charleston because so many successful business people with great experience and funds to invest come to Charleston to relax," McCulley said. "And with a concierge investment group, they can relax."

The plan is to invest in a new company every month, but McCulley said that will depend on the membership of the group, which decides to invest on a deal-by-deal basis. The maximum investment per round is $500,000, he said.

Ernest Andrade, Charleston's business development director and head of the Charleston Digital Corridor, said there have long been individual angels, but to see groups forming is "terrific." He noted a bill that would give angels a tax credit for putting money in local start-ups is making its way through the state legislature and would spur more investment.

"These guys stepping up to develop a fund ... franchised as it may be, is just another reason to celebrate the rise of Charleston's tech economy and another impediment that's starting to get stripped away," he said.

How Angel Capital works

The term angel investor is believed to have originated on Broadway, where it was used to describe wealthy individuals who backed theatrical productions in New York City.

Here's how Angel Capital Group's business model works:

Entrepreneurs send their pitches to ACG's headquarters, where financial analysts vet the companies and draft a report that includes the relevant market and intellectual property insight.

Most companies don't make it through that vetting, but the entrepreneurs that do then get to make their pitches in person to one of ACG's chapters in Denver; Kansas City; Nashville and Knoxville, Tenn.; Jackson, Miss.; and soon, Charleston.

If ACG is impressed after the face-to-face meeting, the group's more than 100 members have the opportunity to invest in the company. Investors pay ACG a 5% administrative fee for each deal.

The whole process tends to take about 10 weeks.

Gavin McCulley will host an informational meeting about the new local chapter April 25 from noon to 1:30 p.m. at Carolina's Restaurant at 10 Exchange St., Charleston.