VC Q&A with Scot Wingo: 2015 ‘a strong year’ but more capital needed

Veteran entrepreneur and now investor Scot Wingo talks with WRAL TechWire in an exclusive Q&A about trends, opportunities and obstacles he sees in the Triangle and across North Carolina. 2015 was a “strong year,” he says, but more capital is needed to fund all the promising firms he sees growing and maturing toward possible success.

Wingo, the co-founder of ecommerce services provider ChannelAdvisor (NYSE: ECOM) which he grew to an IPO in May 2013 and now serves as chairman, has considerable experience from which to speak about venture capital in the Triangle. A veteran of having to raise capital as ChannelAdvisor, which launched in 2001, grew during the post-“dot com” boom, Wingo is now an active investor.

This Q&A is one of several WRAL TechWire conducted to highlight the 2015 venture capital report being issued today by PricewaterhouseCoopers in partnership with the National Venture Capital Association and Thomson Reuters.

Looks like 2015 was strong year for NC with 63 deals, $675 million – What’s your assessment of what the year demonstrated?

North Carolina is really advancing as a region in the minds (and check books) of VCs. I think 2015 was a strong year, but represents a lot of development that has gone on in our region over the last 20 years. Building a startup ecosystem that can generated $675 million in venture investment doesn’t happen over night.

Fourth quarter fell off, however. What factors you think drove down deals?

Because of the holiday season, Q4 is seasonally slow for fund raising to begin with. Plus nation-wide investors started to have some concerns about the economy and the impact of the unicorns out there (startups with greater than $1b) and their valuations.

There were several deals in Charlotte. What do you find encouraging about that?

For a long time, Charlotte has lagged the Triangle because they are more of a financial center than technology. What’s starting to happen though is a new ‘cluster’ (or category) of startups is forming called fintech (short for Financial Technology).

I believe Charlotte with it’s banking and finance DNA has a good environment for this type of fintech startup.

It appears more money is coming to NC from outside the area. Would you concur? What is driving outside interest?

While we have a surge in angel and seed funding here, as you know we don’t have much active institutional investment (series A/B/C).

When I talk to outside investors what they like about the region’s startups are these factors:

Bootstrapping – because of the lack of ‘cheap money’, our startups tend to be lean, mean and scrappy bootstrappers
Interesting categories – We have companies in adtech, healthcare, SaaS, HRIS, mobile, on-demand, healthcare IT, e-commerce, etc. Those are all categories that thematically investors find interesting.
Energy – Our region has a lot of energy that you don’t find in some other areas. It is generally viewed that we are on the rise outside the reason.
Supply – I just finished the 2016 Tweener list and there are 98 companies on there that have a more than $1m (or 10 employees) scale. That’s a ‘nexus’ of companies for an outside investor to come and cherry pick from. They maybe interested in 10-20, but still, how many other areas have that kind of supply and diversity of potential investments?

Several nice exits, such as Ansible to Red Hat for $100 million just two years after launch – are these exits helping draw more interest here?

I think it definitely helps, but we have also had some good IPOs as well and most investors are using the criteria of growth rate, scale, category, team, entrepreneur and what-not vs. exits in the region specifically.