Venture Fund To Assist Charleston Tech CompaniesBy Bruce Smith, AP | Share: Posted on
During the past dozen years, Charleston's Digital Corridor has helped launch dozens of technology companies that have created more than 4,000 high-paying technology jobs. Now the public-private partnership will work with a venture capital fund that should make it easier for those companies to flourish.
Silicon Harbor Ventures announced earlier this month it will begin operating in January as a $5 million venture capital fund managed by the investors who have experience in technology businesses.
"If we have a Charleston-based, locally sponsored company capital fund I believe we can accelerate the success of companies," said Ernest Andrade, the director of the corridor. "We can also give local investors a chance to participate in some of the economic upside that is being generated by these companies."
The corridor was started a dozen years ago to spur development of technology businesses at a time when there were concerns that too much of Charleston's economy was becoming based on relatively low-paying service and tourism jobs.
The corridor helps knowledge and computer-based businesses with training and mentoring, as well as finding employees and providing working space in its two business incubators.
Since the business incubators were opened four years ago, 72 companies have started and moved on to larger quarters. There are 25 currently working out of the incubators where companies can get reasonably priced working space and their employees can rub shoulders with others in the industry.
The startups range from software development and interactive marketing to video production and information technology consulting. A survey of those companies earlier this year found that the average annual wage was almost $72,000, almost twice the average for South Carolina overall.
After training, linking companies to employees and providing startup space, the venture capital "is the fourth leg of the stool," Andrade said. "It's probably the most important piece but we chose to do it last. There are a lot of other communities around who have said we are going to create a capital fund first and then try to figure out the other pieces."
By having the other aspects already in place and a proven record of startups, it helps minimize risk for the investors and maximize the chance of success for the new companies.
By having the investors manage the fund and having it connected with the corridor, investors can get a close look at what they are investing in as opposed to a third party coming in, assessing a company and writing a report, Andrade said. The fund is looking to make investments of $100,000 to $300,000.
Michael Knox, a founding partner of Silicon Harbor Ventures, said the fund will put its money where the investors have expertise "to ensure that the portfolio is concentrated in companies where we can perform the proper due diligence and provide the right ongoing business guidance."
The fund won't simply be limited to Charleston companies but will also explore investing in other tech companies in the Southeast.
The fund had three submissions from local companies requesting capital within 48 hours of its announcement this month. There's also already been interest from tech companies in Ohio and New York who want to relocate to Charleston, Andrade said.