A New Venture Fund By and For Charlotte
The Charlotte Fund is a new venture capital fund designed to give local investors access to the region’s most successful later stage ventures as well as exposure to a number of extraordinary seed stage ventures.
The Charlotte Fund was created by LaunchCLT, a local non-profit dedicated to fostering the entrepreneurial ecosystem in the Charlotte Metro area. I co-founded the organization in 2017 after realizing how many senior execs with impressive startup and tech experience lived and played in the Charlotte area but did not know one another. In the past five years, LaunchCLT has attracted more than 160 mentors and matched them with more than 140 startups. There was only one problem: the best and brightest founders were being funded by investors in other parts of the country, or worse, being lured away from Charlotte.
Enter the Charlotte Fund. I asked fellow venture capitalist and LaunchCLT board member Don Rainey to help me raise a new fund focused on Charlotte startups. During 2022, we designed and launched a truly unique fund.
The Charlotte Fund is:
A venture capital fund whose General Partner is a non-profit. LaunchCLT, a 501(c)3 non-profit, is the GP of the Charlotte Fund. The majority of the carried interest (profit) of the Fund is directed to LaunchCLT tax free and set aside to form the foundation of the next fund.
Pursuing a barbell strategy that limits risk and is attractive to first time investors. 80% of the Fund’s capital will be invested in later stage companies with valuations greater than $100 million. Investment in this stage means reduced risk and faster returns, but also lower return multiples. The remaining 20% of the Fund’s capital will be invested in the region’s most promising pre-seed and seed stage companies. These investments come with higher risk, but also higher potential returns. Whenever possible, the Fund seeks to invest in Qualified Small Business Stock (QSBS), which provides major tax exemptions for Limited Partners in the Fund.
Street smart and pragmatic. We are not a “kiss the ring” fund. We’re committed to the community. We show up for events and host a few of our own. Our approach to meeting founders and performing due diligence is to take field trips to their facilities so we can genuinely understand their vibe and culture. If we pass on an investment, we explain our rationale honestly and plainly, and offer as much advice and support as we can.
An institutional grade investment team that is working pro bono. Don Rainey and I have almost fifty years of combined experience as institutional venture capital investors. We’ve seen every imaginable outcome, from flop to M&A to IPO, and we’ve served on the boards of many startups and helped them navigate from inception to exit. In fact, we were the first two investors in the Fund. Other members of the LaunchCLT community, notably Joe Jackson of Metrolina Capital, are actively involved as investors and members of the Fund’s investment committee.
The Charlotte Fund has partnered with CreativeCo, a local growth equity firm that invests nationwide. Travis Parsons, Christian Czentye, and Ashley Gautreaux have been invaluable in helping us to stand up the fund, source local deals, and deploy capital efficiently.
This fall we closed investments in two of Charlotte’s most impressive later stage companies, Debtbook and Payzer, and we have teed up another for the first quarter of 2023. We also closed investments in three impressive and ambitious earlier stage businesses, StreetFair, Subsalt and Stash Wealth. With every deal and founder interaction, we become more convinced of the wisdom and value of investing in Charlotte.
Please engage with us! If you’re curious about the startup ecosystem, visit LaunchCLT and find a swim lane that’s right for you. If you’re raising capital for your startup, contact us here. The Fund will close to new investors on December 31, 2022.
