PART 2: A comparison of deals today with those in the past
(EDITOR’S NOTE: For the third year in a row, we asked angel and venture investors who live in East Tennessee to share their thoughts on 2014 and their predictions for 2015. We were fortunate to have seven individuals provide their insights. Today is the second article in the six-part series.)
TODAY’S QUESTION: What about the deals you have been seeing? Are you seeing more deals or fewer ones? Are they better than in the past, about the same, or of lower quality?
David Belitz, Managing Partner, Chattanooga Renaissance Fund:
We are seeing strong deal flow. Opportunities are increasing. Quality is all over the place, but generally good. We still see mostly early stage opportunities at the Chattanooga Renaissance Fund.
Eric Dobson, Chief Executive Officer, Angel Capital Group:
The true benefits of TNInvestco program and accelerator networks are starting to manifest as more deal flow and better companies. Better quality deals are forming around certain investing themes or theses: We’re seeing a number of “hyper-local” oriented businesses, many that take advantage of data science and analytics. Intelligent transportation is another very active investment theme, as is the “Physical Internet or “Internet of Things” which by definition involves networked sensors. Lots of deals are presenting themselves to us in those areas; yet, not as many regional companies as we’d like.
Tony Lettich, Managing Director, The Angel Roundtable:
Last year we saw approximately 25 opportunities a month. The numbers have increased to about 40 opportunities per month in 2014. In addition, the opportunities we are seeing are of a much higher quality. This is in-part due to the strengthening interest in entrepreneurialism, and the market. However, a major part of our experience is due to an affiliation with Angel Syndication Central, which has not only brought stronger opportunities to the table but increased our breadth and ability to screen larger numbers of potential deals.
Kristina Montague, Managing Partner, The JumpFund:
Since we are a new fund, I don’t have history to speak to, but our deal flow has been well above our expectations this first year. We use Proseeder as our deal platform and have had over 60 qualified, women-led growth ventures from the Southeast apply since we launched our fund this summer. Our focus on the Southeast and women-led companies has not affected significant opportunity for our fund.
Geoff Robson, President, The Lighthouse Fund:
Deal flow has been good, very good deals in general, stronger than in the past. It is a tribute to the quickly maturing local entrepreneurial ecosystem; what has been accomplished in the last 12 to 24 months is really outstanding looking back on it. There are some signs that the market is starting to overheat a little bit in the form of funding rounds growing into much larger sizes and valuations following along with the growth in size.
Grady Vanderhoofven, Co-Founder and Co-Manager, Meritus Ventures and Southern Appalachian Fund:
I see more deals, and I am aware of more deals, and they generally are higher quality deals relative to five to 10 years ago. That is my observation in Tennessee and in the broader mid-south and southeastern regions of the United States where we typically have looked for deals.
Ken Woody, President, Innova Memphis:
We are definitely seeing more deals in Tennessee and the quality has improved substantially. The entrepreneurial landscape has created more educated entrepreneurs who have a clear plan for how to develop their products and create real value.