Here comes RollingSouth!
In this post we will cover what RollingSouth is, what it will invest in, what its differentiators are, how it is structured, what other funds are doing similar things, and how it differs from what we do every day at VentureSouth.
Hopefully by the end you will understand why you might invest, and take the leap to participating in VentureSouth’s mission to Make Money. Have Fun. Do Good.
What is RollingSouth?
A Rolling Fund:
- Can be advertised in public — which is why you can read this! The fund is being raised under “General Solicitation” rules. You can read all about General Solicitation here.
- Is subscribed to quarterly. Rather than make a big upfront commitment, investors sign up for a smaller quarterly subscription for as long as they would like.
- The fund is all powered by AngelList, a premier online platform for angel investing. AngelList handles all the fund administration (paperwork, taxes, investor reporting, …).
RollingSouth combines the benefits of a Rolling Fund with the proven investing processes at VentureSouth. VentureSouth is one of the leading angel groups in the US, repeatedly recognized as a top 10 angel investment group, with over 400 members that fund early-stage companies in the Southeast.
What will RollingSouth invest in?
RollingSouth will invest in early stage, technology-based companies in the Southeastern United States. Its investments will typically be in collaboration with VentureSouth, in companies VentureSouth members are funding, exercising pro rata rights in, or doing our diligence on.
There are dozens of Rolling Funds listed on. What does RollingSouth offer that these other funds do not? Here are our four key differentiators.
1. Southeastern focus:
- Positive demographics and economic performance plus entrepreneurial dynamism give the southeast great tailwinds: there are many reasons “Techxodus” is seeing people move here.
- Diversified deal flow at lower valuations than major markets, in industries the southeast specializes in.
2. Aligned with the leading angel group in the region
- VentureSouth: a top 10 angel group in North America, with over 400 members, proven processes, a mature track record, and investment relationships with every investor in the region.
- Established team of experienced angel investors active in this market.
4. Established track record:
- Over $50 million invested in 80 companies in the region, with positive ROI and cash returns.
Let’s unpack each of those ideas.
Differentiator 1 — the Southeast
The southeast is 30% of the population and economic activity in the US, with positive demographic trends (both organic and with net inward migration from other states), and above-average rates of economic growth. It’s also a great place to live!
Yet the southeast has not historically been known for its tech scene. That is changing — dramatically. With the emergence of unicorns and mega-acquisitions in Atlanta, VCs moving en masse to Miami, new campuses from Apple and Google in the Raleigh/Durham area, and many more organic trends that don’t make national headlines — from innovation at Furman to unicorns in Greenville to tech communities in Charleston to … — the southeast’s tech scene is advancing rapidly.
Despite this, sources of investment for tech companies remains limited. Few VCs spend substantial time here; even fewer are based or engage much time here. Early-stage capital is becoming more available, but it remains a challenge for entrepreneurs to find local risk-tolerant investors.
As a result, investors enjoy a fairer balance of risk and reward than in some other places. Uncapped SAFEs are rare here!
Differentiator 2 — angel group affiliation
Rolling Funds affiliated with angel groups are unusual; most are individuals, operators, or celebrities. Why does being affiliated with an angel group, and specifically with VentureSouth, help a Rolling Fund?
Not to blow our own trumpets too much, but here are just three of the reasons why we think having VentureSouth on your side is a help:
- Having rounds led by an experienced investment group help entrepreneurs get rounds funded on reasonable terms.
- Having a lead investor with established relationships with all the local funding sources helps later fundraising; and an existing investor enthusiastic to participate in follow-on rounds helps too.
- Having 400 angels on your side gives entrepreneurs a better chance of finding the connection, advice, suggestion or introduction they need.
VentureSouth, a top 10 angel group in North America, with over 400 members and a professional full time team whose job and mission it is to make their investments successful, can bring much value to portfolio companies.
Differentiator 3 — team
Rolling Fund managers are an intimidatingly impressive roster of talented entrepreneurs, investors, and influencers. What does the RollingSouth team bring that others do not?
- Team: RollingSouth is led by VentureSouth — whose three-person team have worked together for 7 years — and David Grisell, a long-standing member of VentureSouth. We are not a solo-GP or a new partnership; we’re an established team.
- Full time: angel investing is not our side hustle or a hobby; this is what we do, full time, every day.
- Angel investing history: we are not new investors learning how to invest on your dime; we’ve been doing this for decades!
- Experience in the southeastern market: we are not recent transplants developing relationships or establishing a brand in the southeast.
Differentiator 4 — track record
As a result of working together for many years, the RollingSouth team has an established track record of angel investing.
82 companies, 190 rounds of investment, hundreds of term sheets negotiated, thousands of pitches reviewed. We have collectively deployed over $50 million, exclusively into early stage technology companies in the southeast — the target of RollingSouth.
Lots of people have deployed capital. Unlike many, though, RollingSouth’s principals have a tangible track record. 36 exited companies, 10x+ returns, 2500% IRRs, SPAC’d companies, and a consistent record of 3x TVPI funds in VentureSouth sidecar funds demonstrate investing success that have resulted in cash proceeds for investors. Book markups are nice; cash is king.
How is RollingSouth structured?
RollingSouth is a Rolling Fund. This explains how Rolling Funds work.
There are several things we think you should consider about RollingSouth’s structure: fees, carry, and GP commitment.
On fees, VentureSouth believes in two things: complete transparency; and keeping fees as low as we can. For the Rolling Fund:
- Management fee: Investment funds charge a management fee, typically this is 2% of committed capital for 10 years. Given the infrastructure RollingSouth uses at AngelList and VentureSouth, our fees are lower: 1% per year for the fund managers and 0.15% per year for AngelList.
- Investment funds often charge other fees for lots of minor things. RollingSouth will not.
On carry: investment funds charge a “carried interest” (a share of the net gain on the fund). RollingSouth does too: 15%. The standard is 20%: if you get all your invested capital back (including fees) back, you pay 20% of incremental gains to the fund manager. We think carry remains a good model for aligning incentives and rewarding good investors, and believe 15% is a fair share. On $50,000 at a 3x (net) returned fund, this delta is an extra $5,000 in the investor’s pocket.
On GP commitment: As Alexander Hamilton says, “When you got skin in the game, you stay in the game”. The “GP commitment” (the investment from fund managers) varies substantially across investment funds. The “market practice” is 1% of committed capital. At RollingSouth, the GP will invest at least 10% of the fund, or a minimum of $25K per quarter. Incentives are best aligned when investors have skin in the game, and we intend to have more skin in the game than most fund managers.
Are other Rolling Funds doing the same thing in the Southeast?
One of the questions investors often ask startups is “who else is doing what you are doing”? So it’s only fair that RollingSouth tackles this question too!
Since they were launched in February 2020, there have been dozens of AngelList Rolling Funds — many of them on here. They cover an impressive range of investment theses, investing teams, geographies, and niches. A saturated market already?
We don’t believe so. Almost none operate in the Southeast; in fact, we believe there are only three based here, and none of them are focused only on investments in this region.
- Pomp Investments: formed by Anthony Pompliano, investor, media personality and Bitcoin advocate, focused primarily on crypto-related startups, and invests nationally from Pomp’s base in NC.
- Sustainable Food Ventures: GPs Ryan and Mariliis are based in Durham, from where they invest exclusively in food-related companies nationally.
- LAB PropTech: from their base in Miami, Tigre Wenrich and Rafael Valdivia invest in property technology companies, again nationally / globally.
So no “direct competition” from other Southeastern-based Rolling Funds focused on the Southeast.
How about indirect competition? Looking more widely, RollingSouth competes against Rolling Funds and other early-stage investment vehicles nationally for investors. There are 16 million of households (see this blog post) that could invest in these vehicles — plenty of market even for dozens of early-stage investment vehicles limited to 99 investors each!
Lastly, how about competition for good deals? You might think RollingSouth “competes” against Southeastern early-stage investors for access to investments here. However, if you’re familiar with the local early-stage investment scene, you know that “too many investors chasing too few deals” is NOT the biggest complaint! Silicon Valley might be overrun with investors; Silicon Harbor is not. VentureSouth, and therefore RollingSouth, collaborates with syndication partners across the region to fully fund rounds of even the most exciting companies in the region.
How does RollingSouth compare to VentureSouth’s existing activities?
Fundamentally RollingSouth does the same thing that VentureSouth does — invests in early stage technology companies in the Southeast. In some ways — which we explore in more detail here — Rolling Funds just angel funds with some new marketing!
RollingSouth can be raised through public marketing and general solicitation, explained here), which is not unprecedented but is unusual. It takes new subscriptions on a “rolling basis” — so investors can dial up or down their investment depending on the fund’s execution or the investor’s liquidity. This is a flexible structure for early stage investing.
So while it’s possible to deploy small checks, flexibly, through a diverse range of situations through “traditional” angel groups and funds, small quarterly subscriptions is a nice feature of Rolling Funds.
So what should I do now?
Hopefully it is obvious by now that you subscribe to RollingSouth via the Apply Now button here! You should do your diligence, though, so if you have any questions please reach out. We hope you will join us in our mission to Make Money, Have Fun, Do Good.