Line on Innovation
May 01, 2017 08:43PM
By Makayla Gay
By John Jeter
The Palmetto State may not have a Triangle or a Valley, but South Carolina’s innovation/tech sector is forming a…Line. With the steady growth of the so-called knowledge economy, entrepreneurs here are drawing an increasingly identifiable link connecting the state’s largest population centers, as well as arousing the interest of homegrown investors willing to finance the future.
Take these companies, for example—just three among dozens, if not hundreds, of forward-looking startups statewide, all within the last several years:
• A Columbia firm building an eBay-like shopping app specifically for college students
• A Charleston software developer creating an enhanced-reality program that helps manufacturers show products in 3D to potential customers.
• A Greenville company offering home gardeners and urban farmers a new way to buy seeds
“Greenville’s got a great kind of culture and vibe here, the creative energy it needs, and a business community it needs,” says Aaron von Frank, 37, who with his wife, Susan, 30, started GrowJourney Seeds of the Month Club; with its tech-heavy backend, the company’s a hybrid of, say, Blue Apron and a monthly wine subscription service. “One of the most stressful times of year is thumbing through seed catalogs, and we curate this stuff for you.”
The von Franks started GrowJourney in 2014. They “went kind of public” the next year, raising $85,000 in, yes, seed capital from private investors and from the Upstate Carolina Angel Network (see sidebar). While South Carolina’s innovation ground here may not be the Southeast’s—or the nation’s—most fertile, von Frank says, “It’s ideal for startups. It can always be better, and it’s certainly improving, but it’s great for us.”
As for any additional investment, von Frank says: not yet. “Right now, we’re going to focus more on an unconventional approach, a grow-organically type model, as best we can. We’re not seeking outside capital at the moment. Certainly, that might change, but we’re working with the resources we have to take it as far as we can.”
In Columbia, Mike Meyers, founder and CEO of Tradeversity, says much the same thing.
Meyers, 25, started his company before graduating in 2014 from University of South Carolina. The app is designed, he says, “to give students another way to find what you need without having to leave campus.”
In November 2015, he closed on a round of financing for $345,000. He also says the South Carolina Research Authority, a $6 million state-chartered fund whose flagship SC Launch program has supported more than 300 companies since 1983, invested $100,000 last year.
Echoing von Frank, Meyers says his focus isn’t financing as much as it is growing revenues and increasing his nationwide presence.
“Right now, I think we’re a little early for venture capital,” he says. “It has nothing to do with giving up equity, it’s better to have a smaller piece, and equity has been a great tool for us. But the reason we have shied away from venture capital is I’d like to see us nail down our sales model and scalability. There are a lot of shiny objects around for investors, and we’re trying to stay laser-focused.”
Marc Murphy agrees with the other two.
He’s CEO of Charleston-based Atlatl Software, whose platform creates three-dimensional renderings of complex products. Manufacturers use the tool to give customers a virtual-reality look at what they’re buying, through a “visualized selling experience.”
Atlatl started primarily with funds from independent private investors. Tranche financing came over the years, starting at $500,000; investments currently total $12 million.
“We’re in a constant process right now of working on our next round of financing,” he says. “I think, for good businesses, capital’s out there. There are less large-scale (venture capital) firms located in the Southeast. I think that’s growing slowly, so the access to capital is there, it just takes hard work when you’re located in a smaller city like Charleston.”
At the same time, though, like the others, Murphy concentrates more on growth. “When you build a great company, there are a lot of different options, like IPOs or mergers, but right now, we’re very focused on building a great company here in Charleston.”
South Carolina’s also interested in building innovation, but a new state report says the Line remains a bit … dotted.
“Tech companies may have a look at South Carolina, but they will see few of their kind,” says The South Carolina Innovation Plan, a 19-page report the state Department of Commerce released in January. “The perception is beginning to shift, but there is still much of an isolated feeling with innovation companies.”
At the same time, though, the plan says, “The sector’s impact in the state goes unrecognized.” Citing numbers in the state’s computer and mathematical occupations, the report shows more than 10,500 employed in Columbia; 6,900 in Greenville; and in Charleston 9,250, a workforce larger than Boeing’s.
Nevertheless, the report sees itself as “an impassioned call to action for stakeholders to go beyond half-measures, to engage with and invest in the many extraordinary startups that will transform the ecosystem. Innovation is not merely a boon to a healthy state economy — it is a requirement.”
Murphy, who took over as Atlatl’s CEO last year, sees promising growth down the Line. “It’s a really robust, dramatic increase just in the past five years, just in technology companies and the ecosystem surrounding them, like co-work space and accelerators. We should be very excited about that.”