Startups founders have been flocking to popular Southeast startup hubs like Atlanta, Nashville and Raleigh in recent years in search of new opportunities, a more affordable talent pool, a reasonable cost of living and a better quality of life. And, investors like Vocap Investment Partners have followed suit.
According to data from the PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report, the total amount of venture capital investments made in the region in 2012 was $811 million rising to $1.9 billion in 2014, a 57 percent increase in just three years.
Georgia, very much been a beneficiary of this trend, has experienced a steady growth in the number and value of venture capital deals. The state saw 55 venture capital investments in 2012 worth $262.3 million and 60 investments worth $495.8 million in 2014.
Atlanta in particular, with its concentration of health IT, fintech, cybersecurity and marketing tech startups, has attracted VC firms headquartered in other states to establish a presence in the city. Vero Beach, Fla.-based Vocap Investment Partners, which opened a satellite office at the Georgia Institute of Technology’s Tech Square research park in Midtown Atlanta, is but one such firm looking to capitalize on the region’s startup potential.
“One of the reasons we opened the Atlanta office here is that we think there is a tremendous opportunity for venture capital in the Southeast and, more broadly, on the Eastern seaboard,” says Vocap Managing Partner Mike Becker. “There’s just so much innovation going on and so many new products being brought to market on the technology side. We think the opportunity – both for the entrepreneur as well as for the capital side – is extraordinary and the returns on the capital can be extremely good if you have a focused, disciplined approach to it.”
Becker, who joined Vocap in 2013, says that a focused and disciplined approach is sets his firm apart. Vocap prefers to make fewer, but larger investments in growth-stage companies in order to take a more proactive role on the boards of the companies it invests in.
A lot of Vocap’s proactive counseling strategy is a direct product of its leadership team’s past entrepreneurial experiences. Co-founder Vinny Olmstead is the former CEO of Vero Beach startup Bridgevine, which merged with Acceller, a marketing automation platform, in 2014. Becker joined the firm following a successful exit of his own. The firm’s other co-founder, Pat Welch, is a co-founder of well-known New York investment firm Welsh Carson Anderson Stowe and remains on a limited partner.
When the firm started in 2010, it focused mainly on making seed round and Series A investments, but has since shifted toward growth-stage companies; partly because of the shorter gestation period typically experienced at the growth stage, but also because it complements the firm’s approach to consulting with its portfolio companies as a whole.
“Part of our thesis is to not only put capital into play but also bring the operating backgrounds of myself and Vinny as leverage for these companies to help them grow,” Becker said. “We’ve both been tech operators before and we both have experience taking companies through the full cycle. We want to be able to help our companies as they go through those stages as well.”
The firm’s portfolio currently includes 17 companies in marketing tech, ecommerce, enterprise software, health IT and mobile. In May, Mercury Payment Systems became Vocap’s first exit when Vantiv acquired it for $1.65 billion.
Naturally, Vocap would like to repeat that kind of success with other companies that fit the firm’s investing profile. Becker says Vocap tends to gravitate toward growth-stage startups approaching $1 million or more in revenue with an experienced leadership team and a “sustainable and defensible solution.” But even if a startup isn’t ready to begin a more serious due diligence process, Becker says his firm and other VCs as well can still be helpful.
“I’d like to think that most of us on the VC side are reasonably approachable and that we are reasonably consultative in terms of speaking with folks,” he said. “It’s not like you’ve got one shot to talk to me and that’s it. With that said, we are actively searching for companies that meet our investment profile.”
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