Triangle startups are drawing more attention from out-of-state investors with 2015 shaping up as possibly the second best venture capital year ever for North Carolina companies, and here are two reasons: Some are hot (WedPics) and others through relationships with local VCs (Bull City). Alexander Pessala of Middleland Capital will be in RTP next week to talk about why. WTW has an exclusive interview.

First, a bit about Middleland Capital:

Based in the nation’s capital, Middleland is an investor in Raleigh-based WedPics and is a co-investor in Contacuality.

Middleland has two primary areas of focus: consumer/enterprise and food/agriculture. Its portfolio cites 39 companies, almost evenly split between the two areas of focus.

Triangle entrepreneurs and investors will get a chance to talk with one of the firm’s top managers, Pessala, when he participates in Bull City Venture Partner’s 2016 venture capital forum, on Jan. 19.

WRAL TechWire talked with Pessala in an exclusive Q&A about what he likes about the Triangle, working with WedPics and Bull City, and what he sees as appealing about the Triangle market.

Our Q&A:

  • Are you looking to make more investments in the Triangle area and if so why?

I am absolutely looking to make more investments in North Carolina.

We continue to see talented entrepreneurs building things that have significant opportunity, and our relationships with local investors are developing nicely.

  • The Triangle is now attracting more capital from outside the southeast. What factors do you believe are drawing more VCs to this area?

With a record high amount of VCs and dollars going towards this asset class, its impossible for everyone to chase the same exact thing and succeed.

The smarter folks realize that in order to survive and perform well, they can to look at underserved regions like the Triangle.

Large exits in the area generally help as well, showing that there’s real money to be made here.

  • Do you believe all the startup efforts here such as accelerators and shared office spaces like American Underground are a factor in the number of startups in this area? Why are they important?

It certainly helps increase the number of startups in total, unsure how much it increases the amount of startups that will succeed.

  • What were the key reasons why you chose to invest in WedPics?

[Co-founder and CEO Justin Miller] is a top tier entrepreneur building an amazing product in a sector that has largely ignored mobile. His numbers speak for themselves.  We immediately realized that not only was he onto something big with the business, but that he was also a pleasure to work with. 

  • You are co-invested with Bull City Ventures in Contactually. Why did your firm choose to be part of a syndicate including BCVP?

We were existing investors in Contactually before BCVP came in. I think the guys at Bull City brought a great history of expertise to the table, and we recognized that value.

  • How important is it to have a partner such as BCVP in a region where your firm doesn’t have an office?

Its always important to have good relationships with local partners, but its more important to have good relationships with partners who are also looking at your region. BCVP and Middleland are both active in the Triangle AND DC, which makes our relationship so strong. I expect we’ll find more ways to work together in the future.

  • Given the recent drop in the markets and a slower number of IPOs in 2015, what are your expectations for 2016 in terms of a) investments and b)exits? Are you concerned we might be in a bubble?

The very top tier of companies can be started, grown and exited in any macro climate, that’s what we’re looking for.

  • Money has been chasing deals. Should entrepreneurs be prepared to lower valuations if the economy turns sour?

Perhaps, however it won’t affect the entrepreneurs that are willing to recognize the long term strategy. Optimizing for valuation early on can be extremely short sighted. 

  • What are the hottest areas you see for investing? Is IoT overhyped, overdone? How about mobile health? Clean energy? There are a lot of agtech businesses here – is that a growth area for startups?

We are very active agtech investors, so we’re obviously keen on continuing in that space.

Seems like the “Uber for XYZ” companies that are operating with negative unit economics are coming under scrutiny as they continue to raise more capital.

I bet a lot of the consumer focused on demand startups will start to put more attention on enterprise opportunities where revenue can be more reliable and margins can be higher.

(Note: WTW is a support of the Bull City event.)