Contributed by theSC Dept. of Commerce

When it comes to equity investment hot spots, SC’s reputation could be described as lukewarm. A new equity investment survey, however, shows that activity in SC is a lot higher than many people think.

This spring, the SC Department of Commerce, along with the USC’s Moore School of Business and the SC Investor Network (SCIN), collaborated on the 2004 SC Investment Report, a study of the equity investment community in SC. The survey also studied activity in GA and NC for comparison purposes.

Investment companies that operate primarily in the southeast or along the eastern seaboard were the targets of the survey. Twenty–one of 39 companies responded. The survey response indicates that a large number of equity investments occurring in the region are not being reported or discussed.

Respondents reported 14 equity investments totaling $9.3 million in SC companies in 2004. Other national surveys, which often measure only venture capital investments, usually indicate activity in the single digits (in terms of the number of investments taking place) in SC. The SC Investment Report focused not only on venture capital investments, but smaller, earlier stage angel investments, as well.

Survey respondents reported investment activity totaling more than $13.2 million among 22 projects in NC, and $22 million in investments among seven projects in GA, last year.

Studies of job growth and entrepreneur development indicate that high– growth ventures create approximately 80% of the job growth in the country. The angel and venture capital community provide a great deal of support to these high–growth ventures. By studying which ventures attracted equity investment in the past, the state can determine areas of strength and weakness and figure out what it needs to do to attract more high–growth ventures in the future.

“This report provides insights into SC’s strengths in the emerging high–growth ventures that will in turn create future industrial clusters,” said Commerce Secretary Bob Faith. “Those are precisely the opportunities we want to grow in SC.”

The survey gave respondents an opportunity to comment on their perceptions of SC as a site for equity investment. While some respondents cited increasing deal flow and the state’s entrepreneurial climate as positive attributes, others noted the state’s still sporadic deal flow and slow pace of return on investments as challenges.

“The report is an important tool for measuring the momentum we believe is building in SC,” said Mark Knight, president of SCIN and a corporate attorney with Nexsen Pruet, LLC. “Recent efforts to develop entrepreneurial infrastructure in SC, such as SCIN, Innoventure, ThinkTec, Engenuity, angel networks, university research parks, and governmental initiatives are starting to pay dividends for the state. And while the state’s entrepreneurial and investment activity is not yet where it ought to be, we are making progress at home and raising awareness in the investment community outside of the state.”

SC has established several programs and passed legislation that make the state attractive for high–growth ventures, including the endowed chairs program, innovation centers, the Venture Capital Investment Act, and the Life Sciences Act.

“We were pleased to participate in this study,” said Dr. Sandra Teel, associate director of the Division of Research at USC’s Moore School of Business. “It does appear that these new programs and laws are making SC more attractive for high-growth ventures.”

The survey also provides information on the venture capital and angel investment groups in SC, including their portfolio preferences and preferred stages of investment. To see the full survey, please visit the Department of Commerce’s web site at www.SCcommerce.com.