New Businesses EncouragedOct 14, 2020 03:38PM ● By David Dykes
By L. C. Leach III
The message was clear: You can still start a business these days and believe it will succeed.
During a webinar last month hosted by the South Carolina Research Authority (SCRA), several state leaders and business experts emphasized to potential entrepreneurs that if they have a business idea they think worth pursuing, it’s OK to open the doors – and use the services of SCRA to get it launched.
“Our mission is to fuel South Carolina’s innovation economy,” said SCRA Executive Director Bob Quinn. “We do this by accelerating technology-enabled growth of academia, entrepreneurs, and industry. And we support each of these groups individually through programs targeted at each of them.”
• SC Launch – targeted at early-stage, technology-based companies.
New companies are supported through in-house mentoring, or its resource partnering network, which includes accountants, attorneys, and many kinds of business experts and professionals. This mentoring and partnering support is provided at either a reduced rate fee or pro bono.
• Industry Partnership Fund. As SCRA’s primary funding source, IPF helps sustain and grow the state’s technology-based economy. This fund makes possible university research commercialization efforts by accelerating technology-enabled growth in research, academia, entrepreneurship and industry. The 2020 annual cap for total IPF contributions is $8 million, an increase of $1 million from 2019.
• Project Development Fund Grants. Money is applied to qualified companies in SC Launch not affiliated with an academic institution. The grants help de-risk new companies in both technology and business, and the grant limit is $25,000 per company during its lifetime.
• Academic Innovation – which supports all South Carolina academic institutions in several ways, including fostering collaboration and creating and enhancing academic startups.
• Seed investing to help new companies grow. SCRA staff prepares new companies to go before SC Launch, Inc., which decides which South Carolina-based companies in the SC Launch program will receive loans and investments to move their businesses forward.
Quinn emphasized that beyond friends and family, SCRA is usually the first – and often only – source of funding to invest in new companies.
“The challenge for these companies is to get over the initial ‘valley of death’ – where for lack of outside funding, they are not able reach the next level of growth,” he said. “So it’s high risk, but high payoff because we’re filling a very vital void in the state’s overall business ecosystem.”
Attorney Jim Buxton, founding partner of Buxton & Collie LLC in Mount Pleasant, advised one beginning point for all new entrepreneurs: Plan on succeeding.
“A lot of entrepreneurs don’t plan on succeeding,” Buxton said. “But what if it works? That’s a phrase I usually start with in an initial meeting.”
He added that many entrepreneurs erroneously feel like “they have to do everything themselves,” when in truth they can employ a number of professionals and groups, such as SCRA, to increase their chances to succeed.
“The more you do yourself, the more crowded your mind becomes, and you don’t have the liberty of mind to focus on the execution of your plan,” he said. “So from the outset, the preventive medicine on any new idea has to be that you have to plan on succeeding and then rely on advisors to get you where you’re going.”
Potential entrepreneurs can choose a number of different options for their startup, including a limited liability company (LLC), which can be used to run a business or hold assets; incorporate and be managed by directors and officers; establish a ‘C’ corporation, which is taxed separately from its owners; or become a partnership of two or more people who share the profits.
“Most people have a clearly defined goal of where they want to be in 10-15 years,” said Brandon Thomas, CPA and senior manager with Elliott Davis accounting firm in Charleston. “Share that goal and vision with your advisors, let them brainstorm with you and be part of the team, and let them help you execute on your plan.”
Thomas’s advice during the webinar was bolstered by Joe Hanna, Founder and CEO of ENGAGE Talent, a predictive analytics and artificial intelligence software company based in Charleston.
Hanna said that regardless of the soundness of a new business idea, investors want most of all have confidence in its creator.
“Investors look at three things – the management team and members, the technology, and the marketing you are creating,” Hanna said. “And they care more about you than the technology. You can have the best product in the world but if you don’t have the management team, investors are unlikely to be interested.”
So far, direct investments and grants through SCRA to launch new companies have totaled more than $53 million. That in turn has led to follow-up funding into new companies now exceeding $1.4 billion, and, more than 4,100 jobs.
“The average salary for new jobs created by SCRA amounts exceeds $71,000,” Quinn said. “So we’re not only supporting jobs, but high-paying jobs.”
When asked about the timing and outlook for start-ups with respect to Covid-19, Quinn, Buxton, Hanna, and Thomas all agreed that there is more money and more opportunity now than there has ever been to try a new business idea and build a relationship with business investors.
“It’s all about building relationships,” Quinn said. “And if our companies can average at least a couple of successful exits a year – through acquisitions or initial public offerings – our engine is really running on all cylinders.”