Editor’s Note: The venture capital market appears to be warming up. Now may be the time to find an investor or a partner. If you want to know who the “players” are in the venture capital world and finance in the I-85 corridor from Raleigh to Atlanta, Local Tech Wire may help you find some answers. This is the sixth part of our series focusing on firms which focus for the most part and/or are based in the Carolinas and Georgia. The series was prepared by Matthew Burns and Daniel Pearson. Each firm was asked to fill out a questionnaire. Not all firms chose to answer all questions or in complete detail, such as funding amounts. To avoid confusion, each firm’s responses appear as submitted to Local Tech Wire. The series will run Monday through Friday. Perhaps best known for one of its co-founders, former White House Chief of Staff and current U.S. Senate candidate Erskine Bowles, Carousel Capital ranks among the largest private equity funds in the Southeast with more than $300 million under management.

That total includes a $155 million fund that was closed in October and has yet to be tapped.

Formed in 1996 by Bowles and former amusement park developer Nelson Schwab, Carousel’s investor network includes more than 65 current and former chief executive officers who provide expertise in a variety of industries, from telecommunications to health care to retail. Their range of experience is seen in the breadth of the firm’s portfolio, with investments in Southeastern firms such as Carolina BroadBand, Claremont Restaurant Group, IllumElex and Industrial Microwave.

Carousel eschews venture financing, preferring to work with companies that have experienced managers and an operating cash flow of at least $5 million. It then puts its network to work to introduce clients to customers, investment banks and consultants and to provide guidance as board members.

Featured Firm: Carousel Capital

Mailing address:
201 North Tryon Street, Suite 2450 Charlotte, NC 28202

Phone number: (704)372-2040

Management Team:

Nelson Schwab III, managing director
Brian Bailey, managing director
Erskine Bowles, managing director
Charles S. Grigg, vice president
Joseph W. Pitt, Jr., vice president
Jason Schmidly, vice president

Focus of firm: Business services, distribution, education, health care, hospitality, manufacturing, safety equipment, technology, telecommunications.

Size of current fund: $155,750,000

Money under management: $300,000,000 million

How many of those dollars have been invested: Company has not yet made an investment from its second fund, which closed October 2001.

Companies funded in 2001: No new investments in NC

Companies funded over the last five years (amount and round for each co.):

Carolina BroadBand – Telecom
ChildrenFirst Inc. – Education
Claremont Restaurant Group – Restaurant
collegeboard.com – Education
Critical Care Concepts, Inc. – Healthcare
Fairpoint Communications – Telecom
HealthHero Network Inc. – Healthcare
IllumElex Corporation – Business Services
Industrial Microwave Systems – Technology
InServe Corporation – Business Services / Insurance
Metiom – Technology
NewSouth Communications – Telecom
Simpson Performance Products – Safety Products

How many new deals do you expect to fund in 2002: Currently, none

In what size range: Varies from investment to investment.

Sweet Spot (types of deals, stage of the company): Company has more than 65 current or former CEOs representing companies in diverse industries and geographic locations. This network of CEOs gives us access to a broad range of skills and expertise, and exponentially expands our circle of business contacts.

Most important attributes for companies seeking funding: Must be a southeastern company with a proven management team and at least $5 million in EBITDA

What differentiates you: Our investors provide us with knowledge about their industries and give us a presence in numerous communities. As our eyes and ears are on their individual markets, they also provide us with an ongoing source of acquisition candidates. The combined expertise of this group enables us to identify investment opportunities early and evaluate them quickly. Many of these investors also serve on, or introduce us to others who will serve on, the boards of our portfolio companies, giving these companies the benefit of their collective wisdom and experience.