Investors have taken a keener interest in growing South Carolina startups, flooding billions into fledgling companies since 2017 as the Southeast remains a mecca for capital investments.
The region’s traditional “powerhouse” states — Florida, Georgia, and North Carolina — have seen the highest average and largest year-over-year growth in check sizes.
Yet from 2017 to the first half of 2022, startups in other Southeast states, most significantly Mississippi and South Carolina, have seen substantial year-over-year increases, according to a report from Panoramic Ventures.
“Despite a well-documented deceleration of venture investing in the first half of 2022 in the traditional innovation hubs — the Bay Area, New York, and Boston — deal activity in the Southeast is robust and remains relatively fast-paced,” said Mark Flickinger, chief operating officer of the Atlanta-based firm.
“With foundationally sound businesses and sustained investor interest, the Southeast continues to exhibit appreciation across many of the metrics that we track,” Flickinger added.
While the Palmetto State saw about the same number of deals done from 2017 to June 2022 as in the prior five years to 2021 when fledgling companies raised $802 million in capital, a 113 percent increase in check sizes infused $1.6 billion into startups.
South Carolina’s manufacturing and industrial tech retained the top spot for infusion of investor dollars this year with 44 deals worth $598 million. The rapidly expanding Charleston-based solar energy company Palmetto Clean Technology Inc. raised $490 million.
Chris Kemper is CEO of Palmetto Clean Technology Inc., which he founded in 2009. Provided
Palmetto began the year with a $375 million investment led by a $220 million contribution from Social Capital, which billionaire venture capitalist and former Virgin Galactic chairman Chamath Palihapitiya founded. The fundraiser was one of the largest for a privately held business in the region.
The company has also drawn investments from actor and former California Gov. Arnold Schwarzenegger, NBA superstar LeBron James, and musicians Aubrey Graham, a.k.a Drake, and Bono of U2 fame.
“I think these types of investors see what we have seen and been working on since 2009, which is climate change and energy independence is a big problem,” Palmetto CEO Chris Kemper said.
Kemper’s firm is helping fuel the adoption of solar power across the country. It has become a top 10 full-service residential solar company with capital infusions, expanding operations from South Carolina to 25 states, said Jason Conrad, vice president of platform commercialization.
The company also used the capital to build and launch a clean energy platform and other offerings to help retail, financial services, real estate and other industries break into selling clean energy and rooftop solar to their consumers.
In addition to manufacturing and industrial tech, the study found that investors injected the second largest total, $228 million, in 28 exchanges with FinTech startups in the state. And despite having the highest number of deals — 94 — software as a service, SaaS finished third, earning $188 million worth of investments.
Panoramic Ventures designed the report to give investors insight into where companies are getting built and what challenges the founders are facing. The data can help entrepreneurs identify emerging investment trends to help them develop fundraising strategies.
The venture capital firm examined four trends in the Southeast in its 2022 State of Startups in the Southeast report published in October. It found a record-setting trajectory for deployed capital, continued growth in average deal size, new heights in valuations and an evolution in how the industry has come to define investment rounds.
“It’s clear the foundation of the Southeast has been built to weather the ebbs and flows of venture investing, providing an opportunistic hub for entrepreneurs and investors alike,” Flickinger said in a statement.
He added that the region “is no longer an ’emerging’ venture capital hub just for early-stage companies but rather a mature region with accessible capital for investment-worthy companies across all stages.”
Overall, 10,784 investment deals have delivered $65.9 billion to Southeastern startups since 2017 — $6 billion in capital was deployed across the region in the second quarter, compared to $5 billion at the same time in 2021.
The report found capital deployed increased sixfold from $3 billion in 2012 to $19 billion in 2021, and the average check size increased over 300 percent, from $3 million in 2012 to $13 million in 2022.
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