“As big company layoffs occur, it creates more entrepreneurs.” – Scot Wingo


RESEARCH TRIANGLE PARK – Venture capital investors like to talk about “dry powder” – money available to put into deals. And two Triangle VC vets are doing just that despite all the crazy bad news about the industry, startups and an increasingly pessimistic economic outlet.

Leave it to serial entrepreneur (and thus one big optimist betting on a better future) Scot Wingo to spin tech layoffs as in the end being good news: “As big company layoffs occur, it creates more entrepreneurs.”

Wingo and Robbie Allen, veteran Triangle entrepreneurs who have certainly seen the best – and worst – of times continues to make deals and bring in more partners at the Triangle Tweener Fund which has rapidly become a national pacesetter in startup deals. Yet they are doing so despite an investment market that has become quite shaky over the inflationary pressures of the last year compounded mightily last month by the failure of VC linchpin Silicon Valley Bank.

Rick Smith is editor and cofounder of WRAL TechWire

So in talking with Wingo about announced new deals and partners being disclosed Thursday morning, The Skinny also wanted to talk about the crazy environment – and why he keeps plunging ahead. After all, Wingo was among the first execs to slash payroll at ecommerce services provider ChannelAdvisor when the banking crisis triggered the huge 2008-and-beyond “great recession.” Yet Wingo – CEO at Spiffy on-demand vehicle maintenance and Allen, who recently launched a new artificial intelligence venture, have their hands quite full already. Still, they plunge ahead.

Our conversation:

  • Why are you and Robbie not being more reticent in investing as the economy turns sour and banking crisis/SVB bordering on earthquake?

Not at all, the Tweener fund strategy is to make 10-15 investments a Q regardless of the macro.  In fact there is plenty of data that shows the best investment cohorts were [2001] and [August 2009], etc.  the macro headwinds have created opportunities for us to invest in recaps and companies that previously would have been too crowded for a smaller fund like ours.

  • I think back to 2009 when you/CA were among the first to cut jobs as banking crisis hit. Today you’re plunging ahead with the fund and Spiffy. What are the differences?

For the fund, we believe part of the portfolio idea is to get a mix of quarters and their corresponding macro along with different industries, company stages, etc.

For Spiffy, we haven’t seen a slowdown in our business and in fact it accelerated the last 24 months as people and businesses spent more on services vs products.

Conversely, in {August 2009] we saw ecommerce demand fall off a cliff and had to get in front of that.

  • You are also securing more investors – a “flight to quality” i.e. a vote of confidence in your fund?

We are seeing a mix of people moving to the area, more awareness for tweener fund and for the first year I think some potential investors took a ‘wait and see’ approach since not only was it a new fund but an unusual concept.  Given the quality and quantity of investments in yr1, they are getting off the sidelines and into the fund.

  • Are you putting downward pressure on your portfolio, i.e. are terms tougher for those getting money now that when you started?

We are largely not setting prices,  in q[quarter one] we did see less priced rounds which is a signal the entrepreneur and existing investors are pushing the valuation question down the road 12-18 months.

  • In the Tweener announcement, you talked about ways of raising money including something called SAFES.  Please explain SAFES and why it’s making a difference – on both sides, investor and startup?

Both SAFEs and convertible notes have the feature that they are priced off a future ‘priced round’ – they usually have a discount to that.  For the entrepreneur this gives you room to grow the biz and hope the macro improves, also improving valuations.  For the investor, you get early access and a discount to that future round.

SAFEs were created by Vcombinator and are a simple 2-3 page document that are more founder friendly than convertible notes. (Happy to go into more, its a meaty topic)

  • What fallout have you seen from SVB failure, and are you/startups hearing anything, getting outreach from Raleigh-based First Citizens as it takes over?

Well the ‘SVB weekend’ was crazy and scary, afterwards everyone has gotten much more careful making sure their cash is FDIC 100%

  • And while you are staying busy are startups’ moods changing? First quarter venture capital reports are due out next week. What’s your sense of what’s happening?

Late stage is a bit of a hot mess with big valuation resets.  We are seed/series a and the level of activity is actually increasing.  As big company layoffs occur, it creates more entrepreneurs.