CED’s “Connections to Capital” engages 300+ investors and the Southeast Investor Group in Atlanta around scaling and fundraising NC startups.
June 21, 2016 – In today’s busy, competitive marketplace, businesses and organizations with highly curated offerings—whether they be clothes, wine, movies or gifts—stand out above the rest. The rapid rise and popularity of companies like Netflix, Blue Apron and Stitch Fix indicate Americans love purchasing from curated lists.
Venture capitalists are no different. The Council for Entrepreneurial Development’s (CED) new strategic investment matching program called “Connections to Capital” taps into the organization’s institutional knowledge and nearly three years’ worth of data to provide a unique match-making service for its North Carolina entrepreneur members and institutional investors around the world.
So far, it’s helped six NC companies collectively raise over $55 million in the past 10 months.
The new program is the brainchild of CED’s longest standing employee, Dhruv Patel who serves as director of investor relations. It exemplifies the strategic shift the organization has made under the leadership of outgoing President and CEO Joan Siefert Rose to provide the resources and network to help established NC entrepreneurs build, scale and succeed, which ultimately creates a self-sustaining, healthy entrepreneurial ecosystem.
That comes in the form of a variety of programs including a recent “CED Founders Day” hosted at The Frontier, where four long-time members were inducted into the inaugural class of the North Carolina Entrepreneur Hall of Fame. Jay Bigelow, CED’s director of entrepreneurship, told me the event attracted over 200 guests. He was heartened by the many first-time entrepreneurs in attendance who had the opportunity to learn about the region’s entrepreneurial history and those responsible for building it.
But the “Connections to Capital” program could be CED’s most impactful program yet, at least in terms of building the network of entrepreneurs and investors, increasing investments to the region and helping growing companies successfully scale. But to keep it up, the program itself will need to scale, Patel says.
“Connections to Capital”, the program
With 30 plus years under its belt, CED is the longest standing support organization for Triangle entrepreneurs. Although physically housed in Durham, staffers happily accept and serve members from across the state.
Historically, CED has supported entrepreneurs through mentoring services, conferences, education, public relations, support and investor outreach. It has put investors and entrepreneurs in the same room for years at the popular Tech Venture and Biotech conferences, and other programs or meetings. But the “Connections to Capital” program stands out as the most highly curated, targeted and strategic investor-entrepreneur matching program to date.
Created in response to CED’s members’ plea for help connecting to capital sources, the program builds upon CED’s ever-growing dataset and meticulously-built network of investors.
The program is built from the same data Patel collects from investors, the companies themselves and national data sources to populate the biannual CED Innovators Reports. This systematic data collection has created a database with information on funding and milestones for over 1,800 companies.
While CED has always connected members to investors, particularly those looking for seed funding through angels or local groups, Patel and the CED team noted a gap in assistance to companies raising their first institutional investment, typically known as a Series A. So CED began to tap into its existing network to identify non-local investors with portfolio companies in NC.
Most of these investors visit the Triangle regularly but only stay long enough to meet with their portfolio companies. CED asked them to stay an extra half day to meet with other hand-selected startups that CED believed would fit well in their investment strategy.
As Patel says, “If they’ve invested once in the region then if we can find them a good match then odds are they’d invest again.”
The strategy worked. Quickly, CED’s investor network went from 30 to 300 VCs. They’ve also leveraged the board, members, and the investor network to secure warm introductions to other investors new to the region. This has allowed Patel to avoid cold-calling (or emailing) investors.
Not every investor is immediately ready to invest, he says, but CED keeps those on the list up-to-date periodically on CED member companies and the region’s progress. CED can also provide a tailored list of companies who match their investment criteria, along with an introduction.
For a company seeking help from CED in securing venture capital, Patel provides a tailored list of investors who typically invest in similar companies, along with an introduction.
This type of matchmaking is atypical in the startup world. Companies often resort to cold-calling a long list of investors. Investors, meanwhile, don’t typically have a trusted, objective source like CED to help them filter through potential investments in a given market.
New connections to capital beyond existing investors
CED’s investor relations work has landed the organization the first affiliate membership in the prestigious Southeast Investor Group (SEIG), based in Atlanta. The SEIG is a 20-year-old organization with 30 venture capital funds, five corporate venture funds and 25 individual investors as members.
Collectively, the members manage over $1B in investment funds. But they don’t pool their investments together. Rather, the organization allows companies from across the Southeast to present to members, which make their own individual investment decisions, although the members may choose to invest together. NC’s own IDEA Fund Partners is a member and Durham startup Windsor Circle has presented to the group and received investment from SEIG member(s).
The membership is a big deal for CED because it gives NC startups access to the most active institutional investors in the Southeast. It also validates CED’s ability to pair investors with the best companies for their portfolios.
“CED is an excellent screening affiliate for us—they see a lot of things but know what we’re looking for,” says SEIG founder and chairman Martin Tilson.
Building a self-sustaining entrepreneurial state
As the region’s startups scale, so does the need for programs like “Connections to Capital”.
Patel says that once a company has received institutional investment, it is less likely to need assistance in raising further funds because previous investors can either fund it themselves or assist in raising additional capital.
Spoonflower, baebies, Zaloni, Contego Medical, FilterEasy and inMotionNow, the companies that have raised the $55 million, are examples of that phenomenon. And Patel says he’s making at least seven introductions between startups and investors every week.
But to remain competitive with other regions, more successful Series A raises are needed in the Triangle. And to assist in match-making those deals, CED will need to scale their program. Patel was bullish when asked how CED plans to scale, but given the personal, time intensive nature of the program, additional (or reallocated) staff and funding are likely needed.
And while investing is a long-game, most deals take months to close and some even years, the program is also, in a sense, a numbers game. The more matches CED makes, the more investments will occur.
But without the personal relationships Patel and other CED staff build, the numbers wouldn’t matter. So for now, they’ll keep doing what they’re doing but build and iterate upon it with hopes to scale—much like the members they serve.